THE WATCHDOGS: Report details how Claypool tried to block ethics probe

He was asked to step outside the room. But Forrest Claypool, Chicago’s schools chief, wouldn’t budge.

The inspector general for the Chicago Public Schools, Nicholas Schuler, had shown up at a school board meeting last December to vent his frustration with the CPS chief executive and with Claypool’s outside attorney. They were impeding an ethics investigation focused on Claypool’s top CPS lawyer, he said.

Chicago Board of Education members ushered Schuler into a private session. Schuler argued that Claypool shouldn’t be present during his closed-door discussion because he wanted to talk with the board about an investigation that “clearly involves his discussions and decisions, as well as those of his top staffers,” according to a confidential report from Schuler to the board obtained by the Chicago Sun-Times.

But Claypool “refused to leave,” according to the documents from the ongoing, internal investigation of Claypool and his handpicked CPS general counsel, Ronald Marmer.

CPS spokeswoman Emily Bittner said Friday that Claypool stayed in the meeting with Schuler because board members wanted him there.

“Claypool asked whether board members wanted him to stay or go,” Bittner said. “They indicated he should stay.”

The inspector general’s investigation was prompted by Sun-Times reports about the Board of Ed’s decision to hire a law firm, Jenner & Block, where Marmer formerly worked to represent CPS in a lawsuit. Marmer oversaw Jenner & Block’s work for the schools even as he was receiving payments toward a $1 million severance from the firm.

The documents obtained by the Sun-Times detail how Claypool scrambled to find legal justification for Marmer’s actions — and portray the CPS boss and Eaton as obstructing Schuler’s investigation, which has now gone on for 16 months.

Schuler also wrote that Claypool’s hiring of Jenner & Block and Marmer’s supervision of his old firm’s work amounted to “a critical failure of executive judgment.”

The Sun-Times previously has reported that Schuler accused Claypool and other top CPS officials of engaging in an “apparent whitewash attempt” of an ethics violation by Marmer.

Four CPS staff lawyers and two outside attorneys had told Claypool that Marmer broke the ethics code, records show. Only Eaton — a Claypool political contributor who was the seventh, and final, lawyer to be consulted — said he thought Marmer did nothing wrong.

“Significant outstanding questions remain because obstacles have been deliberately placed along the path to a complete and thorough investigation,” Schuler wrote in June, according to the newly obtained, 16-page secret memo he gave to the school board. “And the heavy hand of J. Timothy Eaton, the Taft Law attorney hired by the board to represent it in this investigation, rests on those obstacles.”

Marmer’s actions were a “black-letter violation of the Code of Ethics,” Schuler told the school board.

Under CPS’ ethics rules, employees can’t supervise work by contractors with whom they have a “business relationship” — defined as any transaction worth at least $2,500 in a calendar year.

When the Board of Ed hired Marmer at Claypool’s urging in late 2015, the attorney disclosed he was in the process of getting five yearly payments of $200,000 each in severance from Jenner & Block. He left the firm in 2013. The payments were to continue through 2018.

That caught the attention of Andra Gomberg, CPS’ ethics adviser. She later told investigators that Jesse Ruiz — then a school board member who cast one of two votes against hiring Marmer — asked her to review Marmer’s financial-interest disclosure.

After looking at the form, Gomberg reported telling a supervisor “the board should not retain Jenner & Block,” according to Schuler’s records.

“From the time of Marmer’s hiring, she had questions about Jenner & Block’s relationship with him,” Schuler wrote of Gomberg.

But the firm soon began to work for CPS anyway, internal CPS documents show.

Gomberg met with the CPS Ethics Advisory Committee. Its three members “unanimously decided” Marmer shouldn’t be supervising Jenner & Block’s work for the public schools, according to the inspector general.

Gomberg and her boss, CPS labor relations officer Joseph Moriarty, met with Marmer on May 10, 2016, to tell him about the decision.

“Moriarty said he agreed with the committee’s assessment,” Schuler wrote. “Moriarty also recalled that Marmer became ‘concerned’ by the decision because he had already been ‘doing it,’ and told the group that he would have to speak with Claypool about it.”

Two days after the in-house lawyers met with Marmer, Claypool sought the first of two opinions from outside attorneys. Pat Rocks — a former CPS general counsel — said he thought Marmer had violated the ethics code. And in early June 2016, longtime CPS labor lawyer James Franczek told Claypool he’d reached the same conclusion as Rocks and the four in-house lawyers.

The day after Claypool met with Franczek, Schuler said, Claypool made his first call to Eaton on the matter. Three days later, on June 10, 2016, Eaton issued an opinion letter defending Marmer.

Eaton’s letter stated that Marmer didn’t violate the ethics code because he didn’t have an “economic interest” in Jenner & Block. But unlike the other six lawyers who had weighed in, Eaton avoided the question of whether Marmer had a business relationship with the firm.

The chain of events involving the seven lawyers, Schuler wrote, appeared “akin to an attempt to sweep the matter under the rug.” He also noted that Eaton had contributed $5,000 to past political campaigns of Claypool, a former Cook County commissioner and failed 2010 candidate for county assessor.

“It creates the distinct impression that after two ‘go-to’ outside attorneys refused to okay Marmer’s conduct, Claypool turned to a proven former financial supporter to get the answer he wanted,” Schuler wrote.

What seemed to concern Schuler even more was that Claypool then turned to Eaton again to represent the school board in the investigation of Marmer. He said that posed a conflict of interest because the inspector general considered Eaton “to be a least a material witness in this investigation — with a possibility that he could turn into a subject.”

In October 2016, Eaton wrote to Schuler after the inspector general contacted Rocks and Franczek. Eaton told Schuler the school board was asserting “attorney-client privilege” to keep him from learning what Rocks and Franczek had told CPS about Marmer.

Records show Eaton told the inspector general he would not let him conduct interviews with Marmer or Claypool unless Eaton was present. Schuler said that was contrary to the practice of City Hall’s inspector general’s office, which bars city lawyers from being at interviews with employees.

In his report to the board, Schuler also said Claypool took “an improper stance during this investigation” when he refused to leave Schuler’s meeting with the school board on Dec. 7, 2016.

Schuler had come to the meeting to tell the board it should drop its insistence on asserting attorney-client privilege. By staying in the room, Schuler said, “Claypool was exposed to details of the OIG’s investigation and the OIG’s assessment of the investigation.”

He said Claypool’s actions “created the appearance that he was attempting to control or limit the . . . investigation.”

CPS finally dropped its assertion of attorney-client privilege, and Eaton was replaced as the board’s lawyer in the probe after Schuler filed his preliminary report last summer.

Schuler declined to comment.

Claypool has defended hiring Jenner & Block and said he didn’t think Marmer broke the rules by supervising the firm’s work because he would have received his severance regardless.

Claypool also said last month that he was sorry for making a “mistake” when Schuler interviewed him at CPS’ central offices. The schools chief initially told Schuler he didn’t remember asking Franczek to change the language on an invoice that the lawyer had sent CPS to make it “less specific.”

Bittner, the CPS spokeswoman, has said Claypool asked Franczek “to reword the initial description of services, which involved the terms ‘ethics’ and ‘Marmer.’ The invoice was reworded to say the work concerned a personnel matter.”