By: Ray Gibson and John Bebow

March 8, 2004, Chicago Tribune

More than a dozen companies that formerly participated in the scandal-plagued city Hired Truck Program didn't have the authority from the Illinois Commerce Commission to operate in the state, records show.

On Thursday city officials asked the commission to turn over the state agency's records on more than 160 companies that participated in the $40 million-a-year Hired Truck Program.

Those records, already obtained by the Tribune, show that more than a dozen firms, or about 10 percent, don't have authority to operate in the state, and the records raise new questions about how well the city manages the program.

In addition, the records show that dozens of other individuals, Hired Truck participants and companies profited from the program by leasing trucks to the firms in the program, sometimes at rates as high as 90 percent of the gross profits of the truck. In some cases, there are no corporate records that identify from whom the trucks were leased.

The records will also help the city establish whether the trucking outfits participating in the program paid the required city tax of 6 percent on the rental of the trucks.

Nearly one-third of the roughly 160 companies formerly participating in the program have been suspended pending investigations by the city, payment of past-due bills to the city or until they obtain city business licenses. Six of the firms that lack the proper state authority were among the companies the city sidelined.

Many of the companies that lack the authority couldn't be contacted because their telephones have been disconnected. But William Jackson, the owner of an Elkhart, Ind. firm, WEJAC Inc., said his company lost its authority to operate in Illinois because its insurance lapsed, one of the chief reasons a trucking outfit can lose the designation. They can also lose their authority for not buying $5 stickers for each truck they own and other violations.

Jackson said he paid a $600 fine last month and thought his firm's authority was reinstated. He said the firm's trucks are sitting idle in a storage yard. But city records say the firm is still active in the program, and the Commerce Commission said it had no record that the firm had sought reinstatement.

Illinois Commerce Commission records also show a few firms haven't bought the required $5 sticker for each of their trucks for years.

Department of Management and Budget spokeswoman Lisa Schrader said new rules for the program will help the city ensure that all trucks have the stickers and a valid certificate of operation from the Commerce Commission.

She said the city is aware that participants in the program are leasing trucks from other Hired Truck participants and others and has asked a recently hired outside expert to evaluate the impact of the rental practice.

"We do know some of the smaller companies may not be able to afford the large investment," Schrader said.

Schrader said the city asked for the Illinois Commerce Commission records as part of its internal review of the firms in the program. But she said the onus was on the "companies to stay current."

In a related development, an outside accountant who reviewed November 2003 billings by the firms in the program showed hundreds of accounting problems, including $24,000 in billings by the truck outfits that were insufficiently documented.

The accounting firm, Gladys R. Wilson & Associates, found hundreds of examples of incomplete records. The problems included:

- 704 cases in which dump trucks did not have clear documentation of dump activity.

- 313 cases in which Hired Trucks had "no activity recorded" or "unclear activity description."

- 241 examples of work reports that lacked supervisors' printed names.

- 111 cases of missing truck sizes or other equipment descriptions that would validate the rates vendors charged the city.

The accountants, who documented the concerns in a Jan. 29 report to city officials, found the city relied on "insufficient" records in paying out $36,888 worth of vendor billings. The accountants could only justify $12,597 of those billings.

The remaining $24,291 in questionable billings represented 2.3 percent of all Hired Truck payments for November. Accounting experts said that's unacceptable.

DePaul University accounting professor John McEnroe said those numbers represent a "major weakness" in city accounting.

"Even when an organization has a petty cash fund for small, miscellaneous expenditures, the receipts and an explanation of their nature should be documented," McEnroe said.

Northwestern University accounting professor Larry Revsine suggested the city should go farther back in the Hired Trucks records to "get a better fix" on undocumented billings.

The city has no such intention, said Schrader, because officials have instituted a "whole new set of checks and balances" as a result of the one-month audit, which cost $50,000.

Those reforms include revamped daily paperwork filled out by Hired Truck vendors and tightly monitored by city supervisors, Schrader said.

Despite the lack of full documentation, Schrader defended the city's payment of $24,291 in questionable November billings.

"It's very likely that those costs were justified," she said.