The Mirage: A fake tavern that exposed real corruption, ten bucks at a time

The Sun-Times bought a bar in 1977 to document 'government by envelope'

January 16, 2012

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A city fire inspector reaches for his ten-dollar payoff. (Photo/Jim Frost for Chicago Sun-Times)

As a young reporter at the Chicago Tribune in the early 1970s, Pam Zekman had repeatedly asked her editors to buy her a tavern.  Then she went across the street to the Sun-Times, and she found an editor ready to say yes. 

To be clear, Zekman’s desire to open a bar was strictly journalistic.  Like lots of other reporters, she got calls all the time from small-business owners who complained about being shaken down for bribes by city inspectors-- day after day after friggin’ day. 

“They were fed up,” she recalls. “They didn’t want to pay these bribes anymore.” Somebody, they said, ought to write a story.

But she could never, ever get anyone to go on the record. They were all afraid that the city would find a way to get back at them and destroy their business.

Which, she had to admit, was an understandable fear. 

“We thought about it, and we decided that the only way we could document this was to become the victims.”

Zekman had a ready partner in the Better Government Association, or BGA, a non-profit that worked with investigative reporters, where Mindy Trossman was a young investigator.  

“And as far as what kind of establishment,” Trossman recalls, “we couldn’t do a dry cleaner. After all, what did we know?  We knew how to drink. And make a hot dog.”

Plus, a bar offered special reporting opportunities because so many inspectors had jurisdiction: health inspectors, liquor inspectors, building inspectors—from both city and state agencies. “And that’s just what we wanted,” Zekman says. “We wanted to test out how widespread this was—not just one agency.”

Thirty-five years ago, at the very end of 1976, Zekman’s boss found the money to fund the project, and sent her off to shop for a seedy tavern.

It took months. As Zekman notes, there were a lot of factors: “Is the location good? Where could we hide a photographer? Could we afford them? And were there obvious violations?”

The place they found, on the corner of Superior and Wells, had plenty of those. Frayed wires dangled everywhere, the bathroom’s plumbing was a bad joke, and both rats and roaches had thriving colonies.  The basement’s floor oozed raw sewage—and was crawling with maggots. 

It was perfect. They named it The Mirage and started getting ready to open.

They had some strict ground rules. Most important, says Zekman, was that they couldn’t actually offer anybody a bribe. “We couldn’t say, how much would it cost me to ignore this?”

And the inspectors were too savvy to just come out and ask for money. “They’d say things like, I’d like to work with you.” 

Luckily, Zeckman and crew had a guy.

“Our job became much easier when we hooked up with Mr. Fixit, Phil Barasch,” she recalls. “He was straight from Central Casting.”

Zekman and the BGA’s director of investigations, Bill Recktenwald, were shopping for saloons—posing as a married couple—when they met Barasch, who represented some bar owners who were looking to sell.

He let them know, at that first meeting, that they’d want him as their accountant. He offered to help them cheat on their taxes, and to make sure inspectors didn't bother them.          

“We weren’t there for more than a few minutes when he just openly told us that he would tell us how to take care of the inspectors,” Zekman recalls. “And in fact he ended up doing just that, telling us to put ten, twenty, whatever—in cash, in an envelope, and tell them Phil Barasch told me to give this to you.”

And now it turned out, it wasn’t so hard to work with the inspectors after all. Bill Recktenwald sounds like he kind of enjoyed it.

“We just acted dumb!” he says.  “And the dumber we acted, the more people wanted to tell us how things really operated. A number of them asked us, ‘Are you from Chicago?  Don't you understand how things work?’”

And the inspectors came surprisingly cheap. When an inspector came to visit, whoever was handling the guy “would leave an envelope on the bar--which had a whopping ten dollars in it,” says Jim Frost, a Sun-Times photographer who worked on the story. 

Perched in a loft above the bathroom, shooting through a hole in the wall, Frost got photos of the fire inspector who took his ten bucks without even looking at the exposed electrical wiring.

The building inspector did look around, took note of a couple of serious issues—then scooped up his fifteen bucks and left without writing up a thing. 

“It was an amazing part to everybody that they would sell out so cheap,” says Frost. “The public safety for ten dollars.” 

Actually, the state liquor inspector held out for fifty bucks.  

And not everybody was on the take.  The health inspector gave the Mirage a thumbs-up without going near the funky bathrooms or the filthy basement—but he didn’t take a dime.

“So, he was incompetent,” says Zekman, “But he didn’t take money.”

And the story went beyond inspectors: Accountants became a big part of it. 

After all, Mr. Fixit had promised to help them keep a set of phony books for tax purposes, so Zekman and Recktenwald wondered if other accountants would offer the same service.  

Boy, did they.                              

“Over and over and over again,” says Zekman, “they would say, ‘I can show you how to skim 20 percent, I can show you how to skim 30 percent, 40.’” 

The Mirage hired them all, and ended up keeping several sets of books: One honest set, which they submitted at tax time, and another for each of their crooked accountants.

Then, after just two months of operations, the Mirage closed—on Halloween. 

“We could not stay in business longer,” says Zekman. “There was concern that people already were getting an idea that we were there."

Especially because the Mirage staff weren’t the only journalists trying to keep a low profile around the joint. Mike Wallace and a crew from 60 Minutes had been visiting the bar on and off even before it opened. 

In fact, had they stayed open much longer, they might well have gotten caught—by the competition. 

Zay Smith, the Sun-Times reporter who wrote up the Mirage saga, says that shortly after the bar closed, the Chicago Tribune assigned a reporter to check out rumors about Zekman’s project.  “The assignment was to pub crawl,” he says, “and look for a short redhead behind the bar.”

After the Mirage closed, the staff didn’t exactly mind going back to their day jobs.

“There is no glamour in being a day-to-day barmaid,” says Trossman, who didn’t find the hot-dog-making side such a thrill either.  “It’s like, ‘I have a masters degree, and, yes, you want what? What do you want on that?'"

The Sun-Times published the first installment of its Mirage Tavern series on Sunday, January 8, 1978. That evening, after the Super Bowl, the 60 Minutes segment aired, including a stunning Mike Wallace interview with Mr. Fixit.

After Barasch acknowledged that widespread tax fraud in cash businesses was “common knowledge,” Wallace went in for the kill, with a purr:  “Look, between you and me,” Wallace said to the accountant, cameras rolling, “you do it.  Everybody does it.” Barasch didn’t deny it a bit.  (Decades later, Wallace titled his memoir Between You and Me in Mr. Fixit’s honor.)

The world sat up and noticed.

“I remember sitting in the BGA office one day,” says Trossman, “and getting a call from London: ‘Hullo, I’d like to talk to you about your pub.’”

Chicago noticed too. Inspectors were suspended, fired, and chastised. The state department of revenue set up a special bureau to investigate cash businesses—and called it the Mirage Audit Unit. 

Readers responded too—by coming forward with their own stories. “After the story ran, we had to set up a phone bank in the city room,” says Sun-Times photographer Jim Frost. The complaints about shakedowns were the same as ever, he says, “but now people would actually talk.”

The Sun-Times ran stories from the Mirage investigation for almost a month solid. The paper named names of inspectors and accountants, of contractors who passed along bribes, of a gun-runner who did some business in the bar, and of the people who ran the brothel down the street. 

None of them denied that the stories about them were accurate. (The manager of the brothel did complain, says Zay Smith, that the stories about his business were “too accurate—apparently he thought it was in bad taste.”  That is, he didn’t think a family newspaper should print that kind of thing.)

And none of them—not even Phil Barasch, who had admitted on national TV to committing tax fraud—went to jail.

But federal investigators did then step on the gas in an ongoing sting operation of their own. A few months after the Mirage stories came out, federal prosecutors indicted a third of the city’s electrical inspectors.  Zekman thinks the federal case—and all the federal corruption prosecutions that have followed in its wake—did contribute to a real change in the last few decades.

“All the public corruption indictments have had an effect,” she says. “Maybe not on governors yet. But I do think that-- not just with low-level inspectors but their supervisors, and their supervisors' supervisors-- that has had an effect.”

Government by shakedown isn’t over-- just ask William Cellini-- but the ante has gotten considerably higher. (Just ask Tom Rosenberg.)

A lot of the little fish have been scared away. 

“Does it still go on?” says Zekman. “Yes. Is it as wide-open as it was? I don't think so.”

[Correction: The original version of this story-- and the audio version still posted here-- placed the Mirage at Superior and Clark instead of Superior and Wells.]