ComEd, City Club Focus Of Federal Investigation: Source | WBEZ
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Source: Feds Focus On Clout Hires At ComEd, Leader Of Chicago’s City Club

Updated: 7:20 p.m.

Federal investigators are looking into allegations that Commonwealth Edison hired multiple politically connected employees and consultants in exchange for favorable government actions, including electricity rate increases, WBEZ has learned.

A source involved in the investigation said authorities believe many of the clout hires at the state’s largest electric utility got paid but did little or no work, and some of them have ties to Illinois House Speaker and state Democratic Party Chairman Michael Madigan of Chicago.

In another previously undisclosed development, agents investigating those hires are also probing the role played by Jay Doherty, a longtime lobbyist for ComEd and president of the City Club of Chicago, the source said. The City Club is a prominent public affairs speaking forum that’s a regular stop for Illinois’ top politicians.

Authorities raided the City Club’s offices in the Wrigley Building on Michigan Avenue for documents about ComEd earlier this year, according to the source, who spoke on the condition of anonymity because the investigation is ongoing. A Wrigley Building doorman on Friday said agents took boxes of documents and computers during the raid.

City of Chicago records show ComEd has paid Doherty more than $530,000 over the last eight years to lobby for them at City Hall. But he does not have to publicly disclose what compensation he gets for lobbying in Springfield, where he has been listed as representing the company since 2010.

Events hosted by the City Club often have featured speakers from the power company, including Anne Pramaggiore. She abruptly left her job as chief executive of ComEd parent Exelon Utilities Corp. on Tuesday, following disclosures in recent months that the companies have received subpoenas from federal prosecutors in Chicago.

Doherty hung up on a WBEZ reporter who reached him by phone this week. He did not return messages seeking comment on the raid and his role at ComEd.

Nobody has been charged with wrongdoing in the probe of the massive company, which has a state-granted monopoly on providing power for much of northern Illinois.

But the developments offer new insights into the nature and scope of a sprawling federal public corruption probe that prompted an FBI raid at the state Capitol office of powerful Democratic State Sen. Martin Sandoval last month.

ComEd had previously disclosed the feds asked for information about its lobbying activities and communications with Sandoval. Documents from the raid show the feds’ sought records Sandoval had on ComEd, Exelon, four unidentified Exelon officials and anything related to rate increases.

A spokeswoman for Exelon did not answer WBEZ questions Friday about the investigation, the City Club raid or the company’s continuing relationship with Doherty.

“We are cooperating fully with the investigation, and we are not commenting on the government’s investigatory activities,” Exelon spokeswoman Jean Medina said in a statement.

A Madigan spokesman did not immediately respond Friday to a message from WBEZ, seeking comment about the investigation and ComEd.

Three sudden departures

ComEd depends on Springfield lawmakers and regulators for permission to increase electricity rates for its more than 4 million Illinois customers. To that end, they’ve long had one of the most robust and well-connected lobbying operations in the state Capitol.

Prammagiore’s exit was not the only sudden departure from Exelon.

On Thursday, the lobbying firm of Michael Kasper, a top legal aide and advisor to Madigan, informed the state that it had ended its relationship with John Hooker, a lobbyist with decades-long ties to ComEd.

Hooker was a fixture on the Springfield lobbying scene and a former ComEd executive, who began his career in the company mailroom. Hooker left ComEd in 2012 after a 44-year career and lobbied for the company ever since.

It’s unclear what was behind Hooker’s departure as a lobbyist for ComEd. Kasper, who is general counsel for the Democratic Party of Illinois, did not return repeated calls this week, and Hooker did not respond to messages from WBEZ on Friday.

Hooker and Pramaggiore’s departures followed the resignation of ComEd’s senior vice president of governmental and external affairs, Fidel Marquez, Jr. That personnel move was announced by the utility in an Oct. 2 filing with the federal Securities and Exchange Commission.

Marquez is still registered as chairman of ComEd’s political action committee, which regularly donates to both Democratic and Republican lawmakers, according to state campaign-disclosure records.

Anne Pramaggiore
Seth Perlman/AP Photo
ComEd's Anne Pramaggiore speaks to reporters during a news conference at the Illinois Capitol in Springfield on May 8, 2007. Pramaggiore abruptly resigned from Exelon this week amid a growing public corruption probe.

ComEd’s PAC has given a total of $253,000 in campaign contributions to the Democratic Party of Illinois and the Friends of Michael J. Madigan political committee in the last 15 years, records show. Over the past 11 years, individuals listing ComEd or Exelon as their employers have reported contributing more than $85,000 to those same two Madigan-controlled campaign funds.

WBEZ also found another indirect link between Madigan and ComEd - this one involving one of the speaker’s relatives.

State records show Doherty, the ComEd lobbyist and City Club leader, has another client called Catalyst Consulting Group, Inc., a Chicago-based information technology firm.

That firm lists only two lobbyists in its 2019 lobbyist registration: Doherty and Jordan Matyas, who is a former Regional Transportation Authority lobbyist and Madigan’s son-in-law.

State records show the firm is seeking “state support for IT projects and services” with the governor’s office, the Department of Innovation and Technology and Department of Revenue.

It’s not clear whether the lobbying partnership between Doherty and Matyas exists with any other clients. Matyas could not be reached Friday.

Exelon and ComEd have said they are cooperating with the federal probe. The company recently disclosed it has formed a special committee to deal with the matter and has hired outside lawyers.

Medina said the company would not release copies of the subpoenas they’ve received from the office of John Lausch, the U.S. attorney in Chicago. Because the utility is not a government agency, it is not subject to the state’s open records law that requires public officials to release search warrants and subpoenas.

In a state where patronage hiring and crony-contracting scandals have been endemic for generations, there is no requirement that public utilities such as ComEd have to disclose who they employ and award contracts to.

It is, however, required that lobbyists reveal their clients, and the utility has employed a lengthy list of former Madigan aides and retired members of the speaker’s House Democratic caucus to make their case in Springfield.

This year alone, ComEd and Exelon Generation lobbyists have reported spending more than $47,000 wining and dining legislators, state records show.

That total is more than what Springfield heavyweights including the Illinois Chamber of Commerce, AT&T, the Illinois State Medical Society, Comcast, the Illinois Education Association, Caterpillar and State Farm have spent on lobbying expenses this year — combined.

A series of federal raids

In July, WBEZ and the Better Government Association first reported the FBI had executed a search warrant at the home of former Chicago City Council member and longtime Madigan ally Michael Zalewski.

At the time, three sources familiar with the probe told WBEZ and the BGA that agents were looking into efforts to get work for Zalewski at ComEd and the interactions between Madigan, Zalewski and Michael McClain, a longtime Madigan confidant who was ComEd’s most influential lobbyist.

Michael Zalewski
Bill Healy/WBEZ
Michael Zalewski, former alderman of Chicago's 23rd Ward, had his home searched by federal agents in May.

After being contacted by reporters in the summer, Exelon and ComEd disclosed getting a subpoena from prosecutors but would say only that the request was for information on its lobbying activities in Illinois. Last week, the companies divulged that they received another subpoena earlier this month for "communications" with Sandoval and other unnamed "individuals and entities."

Then, on Oct. 11, the Illinois Senate released a copy of the search warrant used last month in an FBI raid at Sandoval's Capitol office. The document revealed that agents sought all records there on ComEd and Exelon, the four unidentified Exelon officials and "any issues supported by any of those businesses or individuals, including but not limited to rate increases."

The senator’s daughter, Angie Sandoval, works for ComEd’s government affairs department. Angie Sandoval was promoted in June to senior account manager for commercial and industrial accounts, according to her LinkedIn profile.

Wall Street worries

The federal probe and Pramaggiore’s exit this week already had shaken investor confidence in Exelon – and caused a dip in the company’s stock price.

The Chicago-based company, which trades on the NASDAQ exchange, fell 2 percent Thursday to a little over $44 a share. That was its lowest level since December.

Analysts at Mizuho Securities USA, a New York investment bank, issued a report Wednesday expressing concern about Exelon and the investigation.

“Potential grand jury indictments of Exelon lobbyists in the Madigan/Sandoval investigations could derail attempts by the company to obtain passage of legislation in Illinois next year,” the Mizuho analysts wrote, citing the company’s hopes of winning state funding for its nuclear plants.

Exelon is the nation’s largest operator of nuclear power plants, according to its website.

In Illinois, ComEd has been the primary provider of electricity for more than a century, with a coverage area that spans the state from the Indiana state line to the Mississippi River and extends to the south beyond Pontiac, Ill.

ComEd provides power to 70 percent of the people in the state, the company says.

‘Great corporate citizen’

Pramaggiore made a total of nearly $6 million last year and stands to get a retirement package of at least $7.7 million, company filings show.

A Pramaggiore spokesman said Friday she would not comment about her unexpected departure from ComEd or the federal investigation.

Before being promoted to lead Exelon last year, she was the longtime head of ComEd. In that capacity, Pramaggiore appeared five times as a City Club speaker, in 2011, 2012, 2014, 2015 and 2016.

Doherty introduced Pramaggiore at her last appearance in October 2016, without mentioning that he lobbied for ComEd.

In a video of that event, Doherty lauded ComEd: “They’re a great corporate citizen … Their charitable and civic leadership is second to none.”

Dan Mihalopoulos is an investigative reporter for WBEZ. Follow him on Twitter at @dmihalopoulos. Dave McKinney and Tony Arnold cover Illinois politics for WBEZ. Follow them on Twitter at @davemckinney and @tonyjarnold.

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