By Frank Main & Fran Spielman
A politically connected minority-owned Chicago investment banking firm that recently won a piece of the lucrative Skyway toll road deal is at the center of a federal corruption case in Philadelphia.
Loop Capital Markets -- a big donor to Illinois politicians -- secretly funneled money to a Philadelphia attorney to gain business with the city of Philadelphia, according to a federal indictment there.
The indictment accuses the attorney, Ronald A. White, of bribing Philly's then-treasurer, Corey Kemp, to steer city business to favored companies, including Loop Capital Markets. White died this month. Kemp and others are scheduled to stand trial next year.
Loop Capital Markets is not a defendant and is not formally named in the indictment. But the document lists "Company No. 4" as one of the firms that benefitted from White's alleged wrongdoing, and the Chicago Sun-Times has identified Company No. 4 as Loop Capital Markets based on financial details in the indictment and a source close to the case.
Company not a defendant
The company is one of the most influential investment banking firms in Illinois, earning fees by doing investing, bond-underwriting and other financial work for public and private clients.
Dana R. Levenson, chief financial officer for the City of Chicago, said he has read news accounts about the Philadelphia case. Whether it could affect Loop Capital Markets' relationship with the city remains unclear.
"We have used them, and we have a relationship with them," Levenson said. "That is all I want to say. . . . We look at every dealer that we use in any capacity each time we plan on a new hiring."
Loop Capital Markets showered White, the Philadelphia lawyer, with favors, the indictment said. The company contributed $12,500 to the Ronald A. White Scholarship at Wesleyan University between 1999 and 2001. It also gave $5,000 to a political action committee controlled by White, the indictment said.
Then, in 2003, Loop Capital Markets retained White to help it get a piece of Philadelphia bond deals that netted the company more than $300,000 in fees, the indictment said.
"The chief executive officer of Company No. 4 and White agreed that Company No. 4 would pay $5,000 per month for this service, but to disguise White's influence, they agreed to pay the money to Renee Enterprises, a shell company nominally controlled by defendant Janice Renee Knight," the indictment said. Knight was White's girlfriend.
Major political donors
James Reynolds Jr., chairman and chief executive officer of Loop Capital Markets, and other company officials could not be reached for comment. In July, Reynolds told the Philadelphia Inquirer: "This thing in Philadelphia, I'm very shocked, just like the rest of the country."
The indictment does not mention any of the Illinois business that Loop Capital Markets maintains, including bond deals with state government. Both the company and Reynolds are major political donors, records show.
Since 1998, Reynolds donated about $102,000 to state leaders, including $25,000 to Senate President Emil Jones (D-Chicago) and $21,000 to Attorney General Lisa Madigan, as well as $26,000 to the Illinois Senate Democratic Fund and $15,000 to the Democratic Party of Illinois, according to the state Board of Elections.
Loop Capital Markets contributed another $30,000, including $25,000 to the Democratic Party of Illinois and $5,000 to the campaign of U.S. Rep. Danny K. Davis (D-Ill.), records show.
The company was belatedly included as a co-financial adviser on the Chicago Skyway deal after black aldermen complained minority firms were not part of it, said Ald. William Beavers (7th), who is chairman of the Budget Committee and a Reynolds supporter.
The City Council voted unanimously Oct. 27 to privatize the Skyway in a leaselike transaction that pumped $1.82 billion into the city's coffers and averted a property tax increase in 2005. The first $463 million in payments from a private toll operator will help pay off outstanding toll-backed revenue bonds.
"Loop Capital wasn't involved in the original deal," Beavers said, but was later added as an adviser.
"I want them to be part of it, not only Loop but other minority firms," Beavers said. "I want to make sure minorities get their fair share of everything to come through the city."