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U.S. Attorney Announces Indictments in ‘Operation Incubator’ Probe

November 21, 1986 GMT

CHICAGO (AP) _ Seven people, including two aldermen, were indicted Friday in an FBI investigation of alleged City Hall corruption that employed a high-rolling ″mole″ who sought to buy influence in the awarding of city contracts.

The charges are the first to be brought in the case and include racketeering, mail fraud, extortion, federal income tax violations and federal firearms violations, according to U.S. Attorney Anton Valukas. He praised Mayor Harold Washington for his cooperation in the inquiry, dubbed Operation Incubator, and said the investigation continues.


The indictments centered on payments to past and present officials made by Systematic Recovery Service Inc., a New York-based bill-collection agency, and Michael Raymond, a convicted swindler and con man who operated as the company’s Chicago representative.

The investigation was launched more than two years ago, when the FBI enlisted Raymond’s services following his arrest in July 1984 in Nashville, Tenn., on weapons charges, according to his attorney, William Aronwald.

The FBI gave Raymond spending money and the alias of Michael Burnett, then reportedly recorded his sometimes-lavish dinners and meetings with politicians and businessmen over 18 months.

Raymond, who recently was charged with the murder of a wealthy Florida widow, and Systematic Recovery also figured prominently in a similar federal investigation of alleged bribery and influence-peddling in New York City. The scandal led to the suicide of Queens borough president Donald Manes, and a trial of five officials and businessmen stemming from the inquiry is under way in New Haven Conn., where it was moved on a change of venue.

The Chicago investigation became public last Christmas Day when several aldermen disclosed they had been interviewed by FBI agents about their involvement with Raymond or their roles in the contract awarding process.

At the time, Systematic Recovery held a city contract to collect delinquent water bills that had earned the company about $480,000 the previous year.

Through Raymond’s efforts, the company was aggressively pursuing a second, more lucrative multimillion-dollar contract to collect delinquent parking fines.

Aldermen Wallace Davis and Clifford Kelley were charged with multiple acts of racketeering, mail fraud, making false statements to government officials and extortion.


Davis and Kelley were charged with corruptly accepting money or benefits from Raymond. Additionally, Davis was charged with engaging in extorting money from businesses in his ward.

The two aldermen have been strong supporters of Washington. The mayor, who is seeking re-election next year, said Friday that he did not foresee any damage to his chances because of the indictments.

He said the indictments may indicate ″individual corruption″ but not ″systemic corruption,″ which he said his administration has worked hard to eliminate from city government.

Kelley held a news conference to declare his innocence, saying, ″There is a misunderstanding to what the government alleged. He would not be specific, saying his lawyer had advised him not to reveal the nature of the misunderstanding.

Also indicted were Michael Lambesis, chief investigator for the office of the Clerk of the Circuit Court; Herman Mitchell, a former precinct captain in Davis’ ward; Carmen Aiello, a former chief supervisor for collections in the city Water Department; Raymond Akers Jr., a former lobbyist for Waste Management Inc.; and Paul Vesper, of the Chicago suburb of Elk Grove Village.

Mitchell, the only one of the seven who was not linked to Raymond, was charged with attempted extortion of a business in Davis’ ward.

Kelley and Akers were charged with corruptly accepting money from Raymond and from Waste Management. The indictment alleged that Kelley ″is said to have engaged in a variety of tactics″ to assist Systematic Recovery and harming competitors that were seeking the same bill collection contracts. It said those tactics included threats to city officials.

The indictments against Lambesis and Vesper allege that they sold illegal weapons, including an Uzi submachine gun and other automatic weapons, to Raymond, whom Lambesis knew at the time to be a felon.

The indictment against Aiello charged him with illegally receiving $1,000 payments from Raymond on two occasions.

The owner of Systematic Recovery, Bernard Sandow, pleaded guilty earlier to charges of mail fraud.

In New York, Sandow and the company were accused of paying Manes and officials of the Parking Violations Bureau bribes to obtain or keep contracts to collect delinquent fines.

Raymond was sentenced in Nashville to 40 months in prison on the weapons charge, and was given credit for 26 months he was in custody serving as an informant. He is charged in the death of Adelaide Stiles, 66, who disappeared 1975, and Ott Sefkin, a spokesman for the Fort Lauderdale, Fla., police, said Raymond is a suspect in two other killings.