SMELL TEST
Outgoing Ald. Richard Mell long has claimed he held no ownership of this infamous Joliet landfill. But a new lawsuit claims otherwise — and says Mell helped defraud his partners out of millions.
A felon convicted of bribing a public official says he and Ald. Richard Mell (33rd) were silent partners in the Joliet landfill that spurred a nasty family feud with Mell’s sonin-law, then-Gov. Rod Blagojevich, according to allegations in a lawsuit obtained by the Chicago Sun-Times.
Mell has long denied having any financial interest in the landfill, which sold for $17.7 million in 2008. But the lawsuit filed by Robert Pruim Sr. and his son, Robert Jr., in Will County Circuit Court, accuses the powerful alderman of helping create the business, taking a one-third ownership stake and then conspiring to defraud the Pruims out of nearly $3.7 million when the sale occurred.
The lawsuit, originally filed last year, was amended to include Mell on June 3.
The 38-year alderman announced his retirement last week, and the deadline to apply to replace him was 5 p.m. Thursday. His daughter, state Rep. Deb Mell (D-Chicago), is the presumed front-runner.
Dick Mell did not return messages seeking comment, but his lawyer vowed to fight the suit.
“Mell was … a powerful Chicago alderman who had extensive ties to the construction industry,” the Pruim lawsuit says. “He was also father-in-law of the governor of the state of Illinois, which was the largest dumper of clean waste.”
The lawsuit claims Mell held meetings about the landfill deal in his aldermanic office and used his political connections to help a nowimprisoned distant relative, Frank Schmidt, become the face of the landfill business.
Because the landfill could accept construction debris from state construction projects, “neither Pruim Sr. (prior felony conviction for bribery) nor Mell (political figure and father-in-law of the governor) could be listed as ‘stated’ owners,” the court papers say.
On paper, Schmidt — a relative of Mell’s late wife, Margaret — ended up holding 100 percent of the ownership in Land Reclamation Services Corporation in name only, the lawsuit alleges.
But, in reality, Pruim, Mell and Schmidt each had a third of the business, the lawsuit states. And Pruim’s son helped finance the landfill site’s purchase in 2004.
However, when the landfill was sold in 2008, Mell and Schmidt allegedly approached the Pruims and asked them to forgo the bulk of their profit so all of them could invest in a mining-related business in Minnesota, the lawsuit alleges.
That Minnesota project was “a complete sham,” and “Mell provided substantial assistance to Schmidt in carrying out the fraud,” according to the lawsuit.
The Pruims are seeking the nearly $3.7 million they say they are owed from the sale.
Federal court documents show that Schmidt had more than $9 million in income in 2008 — the year of the sale. That same year, Mell reported a capital gain in excess of $5,000 from an “investment in F. Schmidt Corp.” on his aldermanic financial disclosure form.
Schmidt is serving a federal prison term after pleading guilty in 2011 to tax evasion tied to the landfill.
The closing statement on the $17.7 million sale shows no money being paid to Mell, only a $9.5 million payment to Landfill Reclamation Services. Still, the Pruims allege “Mell received a share from the sale of the LRS site as well.”
However, another former alderman’s name appears on the document: former Ald. William J. P. Banks (36th) was paid $100,000 from the proceeds of the 2008 landfill sale.
Reached Thursday, Banks said Schmidt had hired him and other lawyers from Banks’ law firm to assist with transferring Illinois Environmental Protection Agency licenses for the landfill from Land Reclamation Services to the new buyers.
Mell wasn’t involved in any of Banks’ legal work with Schmidt’s company, Banks said.
“This was after all the ruckus [involving Mell and Blagojevich] had been had,” Banks recalled.
“At the time, we were doing a lot of work with IEPA,” he said. Schmidt “needed to get certain final approvals from the state, so we submitted the documents and followed the rules.”
Mell’s attorney, Dennis Berkson, is aware of the lawsuit and is expected to file a response in upcoming weeks.
“We will vigorously defend this lawsuit,” Berkson said. “We have no comment because we have not formally appeared [before the court].”
Schmidt’s lawyers declined to comment. The Pruims’ lawyers could not be reached.
Mell has long denied having any financial interest in the landfill deal, which was the genesis of a public dispute with the now-imprisoned Blagojevich. Blagojevich temporarily shut down the landfill in 2005, accusing Schmidt of accepting illegal waste and of promoting his ties to Mell as a way to get business.
An infuriated Mell lashed out, telling the Chicago Sun-Times at the time that a key Blagojevich adviser — the late Christopher G. Kelly — had been trading plum state government appointments for $50,000 campaign contributions. Mell later publicly apologized after Kelly threatened legal action.
Blagojevich was concerned that Mell had a hidden financial interest in the landfill. As governor, he launched a legislative assault on the landfill industry and pushed legislation that would specifically ban relatives of the governor from having any financial stake in landfills or receiving any “personal financial benefit” from waste-disposal operators.
Again, Mell lashed out.
“Gov. Blagojevich is using the power of his office to have state legislators introduce a bill aimed at the mistaken notion that I have a financial interest in a business owned and operated by a relative of my wife, Margaret,” Mell said in April 2005.
Mell accused Blagojevich of being “so consumed with a single issue that he is laser-focused on our own family tragedy instead of serving the interests of the 12 million others he is supposed to represent. If this were a melodrama, the situation would be comical. But there is no laughter.”
In 2011, Schmidt pleaded guilty to tax evasion after he was charged with failing to pay $2 million in taxes owed on more than $11 million in income tied to the landfill between 2004 and 2008. Sources say that Schmidt, a known drug user, had a history of withdrawing large amounts of cash, according to sources and court records. While cooperating with federal investigators, Schmidt was questioned about the landfill deal, but authorities ultimately could not back up information he provided and deemed him an unreliable witness.
He is now serving time in Elkton, Ohio, and is expected to be released in 2015.
In 1993, Robert Pruim Sr. and his brother pleaded guilty to bribing city of Chicago Streets and Sanitation official Thomas M. O’Connor to gain favorable treatment for city waste contracts. They also admitted buying O’Connor a lakeside house in Indiana and concealed the title through a third party.
Robert Pruim Sr. was sentenced to 15 months in prison in 1994.