Here’s the Deal With the UNO Lawsuit Filed Today

UNO’s former No. 2, Miguel d’Escoto, claims he was unfairly scapegoated by the organization’s ex-leader, Juan Rangel.

Juan Rangel   Photo: Nancy Stone/Chicago Tribune

Of all the blows Juan Rangel suffered during his last year as CEO of the United Neighborhood Organization (which ended in early December, when he abruptly stepped down), none hit so personally as a lawsuit filed this afternoon in Cook County Circuit Court by his close friend and UNO’s former No. 2, Miguel d’Escoto.

The complaint centers on the night of February 12, 2013, when, d’Escoto says, Rangel asked him to stay at the office after hours. Then, Rangel allegedly produced a resignation letter for his deputy to sign, telling him that it was for the greater good of the politically connected organization. If you recall, UNO was, by this time, getting tarred by a week of Sun-Times stories detailing how the group’s rapid rise had been fueled in part by insider construction contracts, two of which were steered to two of d’Escoto’s brothers.

D’Escoto now says he was made the fall guy. His 23-page complaint charges UNO—and Rangel personally—with fraud, duress, negligent misrepresentation, undue influence, mistake of fact, and tortuous interference; in it, d’Escoto demands that he be reinstated to his $170,000 job, and his legal fees and lost earnings be reimbursed. Rangel, he claims, “[took] advantage of the highly-charged political atmosphere that had developed since the publication of media reports … to exert undue influence over Plaintiff d’Escoto’s ability to rationally decide the best course of action,” the complaint reads. “Rangel acted solely for his own personal interest in soliciting and obtaining Plaintiff d’Escoto’s resignation because it was done to preserve Defendant Rangel’s employment with Defendant UNO, which included a lucrative salary of approximately $250,000 per year.”

Sitting recently in a River North conference room, d’Escoto—a former transportation commissioner under Mayor Richard M. Daley (who resigned in 2005 during the hired truck scandal that engulfed his department and ultimately City Hall)—argued that d’Escoto Inc.’s involvement in the construction of UNO schools was properly disclosed in auditors’ reports, tax statements, and bond documents. (d’Escoto Inc. is owned by his brother Federico, a former UNO board member who stepped down before his company was hired in 2010. Another brother, Rodrigo, the owner of Reflection Windows Co., landed millions in subcontracts for three of UNO’s gleaming glass modernist buildings; in the suit, d’Escoto claims Reflection, as a subcontractor, had no direct relationship with UNO.) What’s more, he added, the decisions to hire his relatives were not his. “I didn’t pick my brothers,” d’Escoto says. “Juan hired them.”

But after the Sun-Times stories hit, Rangel told d’Escoto that he would be terminated if he did not sign the resignation letter, the suit says. (Rangel, who spoke to Chicago in October and November for this story, could not be reached in January to comment about the lawsuit.)

“I lashed back at him,” d’Escoto recalled in the exclusive interview with Chicago. “I’ve known Juan 20 years, and I considered him my best friend. I asked, Why, Why am I being asked to resign? I didn’t do anything. Juan replied, ‘Yeah, I know.’ But he said for the sake of the organization that I had to go.” 

“‘If you don’t go,’” d’Escoto recalls Rangel saying, “ ‘all of this stuff is going to happen. The governor is going to cut the money, and if they cut the money, we can’t finish the [Soccer Academy] high school….’ I could finish that sentence for him. We were going to be stuck with this unfinished high school; we couldn’t take that hit financially.”

“I asked if I was going to get severance, and he said, ‘I don’t know, I don’t know.’ And I then I asked, ‘Why tonight? It’s 7:30, 8 p.m. at night, I need to call my attorney. I need to talk to someone.’ And he said because there is a City Council meeting tomorrow. If you sign this resignation letter tonight, it all stops.” 

Of course, it didn’t stop. In the fall, the U.S. Securities and Exchange Commission launched an investigation into the organization’s financial dealings, and by December, Rangel was out of a job. “What attracted me to Juan was the vision: playing with the concepts and the expectations of what kids from Little Village and Back of the Yards could accomplish,” d’Escoto says. “It was powerful stuff. Life shaping. We all believed in that vision.” 

He continues. “But what do they call it? Founders fatigue—where they start this thing, and they have the creativity and vision. . .UNO became aggressive, ambitious, and disorganized. At some point, if you get successful enough, you have to give it over to the pros.”

This story was written and reported by Chicago magazine’s Cassie Walker Burke. To reach Burke, e-mail cwalker@chicagomag.com.

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