Redflex removes $300 million city red light camera bribery lawsuit to federal court

By Jonathan Bilyk | Sep 21, 2015

The red light camera vendor accused of bribing Chicago’s transportation director to get and keep the city’s red light camera contract says it believes the city’s $300 million lawsuit over the bribery allegations belongs in a federal, not county, courtroom.

On Monday, Sept. 21, Redflex filed notice in federal court in Chicago of its intent to remove the case from Cook County Circuit Court.

The Phoenix-based Redflex said the case is proper to relocate to the Northern Illinois U.S. District court, rather than state court, because the dispute involves “citizens” of different states and the lawsuit’s tall demand for damages.

The case was brought in April 2014 in Cook County Circuit Court on behalf of the city of Chicago by former Redflex executive vice president Aaron Rosenberg, who represented Redflex in negotiations with Chicago city officials.

However, the case was kept under seal by Cook County Judge James E. Snyder until attorneys for the city filed documents confirming the city’s intent to intervene and proceed with the litigation. Snyder lifted the seal Aug. 26, allowing Redflex to be notified of the action pending against it.

According to the complaint, in exchange for accepting the offered assistance of former Chicago Department of Transportation manager John Bills in rigging the city bid process to ensure Redflex landed the city red light camera contract in 2003, Redflex funneled millions of dollars in bribes to Bills. The bribes were allegedly hidden in salary and bonuses paid to Martin O’Malley, a friend of Bills’ who allegedly was hired as a phony “consultant.”

After Bills retired from his city post, he also demanded and received a job with Resolute Consulting, “a public relations firm with which Redflex worked extensively.”

According to the complaint, the scheme went to the highest levels of Redflex, as the bogus invoices for O’Malley’s purported work were approved by former Redflex CEOs Bruce Higgins and Karen Finley.

In all, $2 million was paid to Bills and O’Malley. The complaint stated the bribes also ensured Bills would shield Redflex from “any liability for performance issues under its contract with the city,” and paved the way for the city to expand and extend Redflex’s contract.

Bills, O’Malley and Finley have all been indicted in connection with the case and Finley and O’Malley have pleaded guilty. Bills is awaiting trial.

The civil complaint alleges Redflex repeatedly denied in contracts and in related disclosure forms it was involved in bribery of city officials and stated it had complied with the city’s ethics rules.

“The city relied upon Redflex’s false statements and paid Redflex pursuant to the fraudulent contracts,” the complaint against Redflex stated.

The complaint on behalf of the city asks the court to require Redflex to pay the city $300 million – about triple what the city paid to Redflex. Additionally, the complaint asks the court order civil penalties of $5,000-$10,000 for each time Redflex allegedly lied to the city about its bribery and compliance with the ethics rules.

Rosenberg asked the court to award him an unspecified percentage of the judgment, in addition to attorneys fees and associated costs.

Rosenberg is represented in the action by attorney John J. Muldoon III, of the firm of Muldoon & Muldoon LLC, of Chicago.

Redflex is represented by attorneys with the firm of Schopf & Weiss LLP, of Chicago.

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City of Chicago Muldoon & Muldoon LLC Schopf and Weiss LLP

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