Clout bus contractor charged with hiding CPS payments from IRS

SHARE Clout bus contractor charged with hiding CPS payments from IRS

Buses at Jewel’s Bus Company, 1035 W 111th St. | Brian Jackson / Sun-Times

A politically connected bus-company owner who made tens of millions of dollars from contracts with the Chicago Public Schools was charged Thursday with cheating on her taxes by hiding income from schools and trying to impede the Internal Revenue Service.

A federal indictment accuses Jewel Lockhart, the 71-year-old owner of Jewel’s Bus Co., which is based on the Far South Side, of lying on her taxes by “substantially” understating her total income.

According to the newly unsealed indictment, Lockhart and an unnamed family member who worked for the company “concealed income from JBC’s tax-return preparer by failing to record in JBC’s corporate books income received from individual CPS schools and other clients.”

Lockhart “spent corporate money to purchase and renovate a $500,000 home in the city’s Oakland neighborhood and illegally deducted the funds in U.S. tax filings,” the U.S. attorney’s office said.

From 2009 through 2011, Jewel’s claimed corporate income of more than $30.8 million, and Lockhart reported individual earnings of more than $1.1 million, according to the indictment, but federal authorities said the actual figures were much higher.

The case against Lockhart involved the office of U.S. Atty. Zachary Fardon, the IRS, the FBI, the U.S. Department of Education’s inspector general and CPS Inspector General Nicholas Schuler.

Last month, the Chicago Sun-Times reported that Chicago schools officials had fired Jewel’s two years ago, accusing the company of overbilling CPS by at least $1.5 million.

CPS paid Jewel’s more than $75 million in the 11 years before the school district broke its contract with the company in July 2014.

Despite the allegations, officials didn’t move to ban the company from getting CPS business and have not carried out a threat to sue Jewel’s for the money they say it owes taxpayers.

Earlier this year, Jewel’s won two contracts worth more than $541,000 from the Chicago Park District, to bus children to and from summer camps. The park district gave the contracts to Jewel’s after being warned by a CPS official about problems the schools had with the company.

The Sun-Times reported that the Rev. Jesse Jackson had twice intervened with schools officials on behalf of Jewel’s — last year and also in 2010. Jackson said he called CPS CEO Forrest Claypool in 2015 to defend the company because he’s known Lockhart for years, describing her as an “outstanding community servant” who often donated the use of her firm’s buses free of charge.

A spokeswoman for Jackson said he declined to comment on Lockhart’s indictment.

Lockhart and a relative — described in court records as “Individual B”— deposited “thousands of checks totaling approximately $1.2 million” in bank accounts and did not tell their tax-return preparer, according to the indictment.

But they and another unidentified relative withdrew money from those accounts “for personal expenditures and other purposes,” according to prosecutors.

The indictment describes Individual B as a relative of Lockhart who is general manager and corporate counsel of Jewel’s. Lockhart’s daughter, Carshena Ross, is the general manager of Jewel’s and a lawyer, according to public records. Ross was not charged.

A woman who answered the phone at Jewel’s offices, at 1035 W. 111th St., said neither Lockhart nor Ross was there.

Lockhart began as a bus driver for another CPS vendor, became president of that company and founded her business in 1992. Jewel’s became a certified woman-owned and minority-owned business — a status that gave it preference in bidding for government contracts.

Jewel’s contributed $10,500 to political campaign funds controlled by Ald. Carrie Austin (34th), one of Mayor Rahm Emanuel’s top City Council allies, from 2010 through 2014. Ross gave Austin $500 on June 2.

Lockhart, the company and Ross also have contributed a total of $5,500 to Cook County Board President Toni Preckwinkle, state election board records show.

In a statement, a CPS spokeswoman said: “After discovering several problems with this vendor – especially in overbilling – CPS referred this matter to the inspector general. With this indictment, CPS will make a decision on how to best take aggressive action to recover lost funds.”

Schuler, the CPS inspector general, wouldn’t comment Thursday.

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