U. S. indicts CTA official // Medley, 7 others named on fraud, bribery charges

Veteran CTA Board member Howard C. Medley Sr. and seven othershave been indicted on bribery and fraud charges stemming from a $38million CTA diesel oil contract.

The 41-count indictment accuses Brian Flisk, chairman ofMetropolitan Petroleum Co., of making a $22,500 payoff to Medley todeflect CTA Board and staff criticism of Flisk's firm forirregularities in its contract performance.

The colorful, controversial CTA Board member, who is 61, toldreporters at a board meeting Wednesday that he had taken no bribefrom Flisk and barely knew him.

"I can take an oath on my grandbaby," Medley said, "that I havenever taken any money from anybody in any way, shape, form or fashion. . . under any kind of crooked deal . . . that I know anythingabout.

"It is possible that you don't know laws, but God knows I checkwith lawyers before I do anything." He added that he had never hadany dealings with Flisk except to vote on Metropolitan contracts.

Two former CTA employees, accounts payable clerk Benjamin Gay,41, and his superior, Anthony Scardina, 48, were charged with taking$18,450 in bribes from Flisk to help arrange $624,000 in overpaymentsto Metropolitan and to deprive the transit agency of additionalhundreds of thousands of dollars in discounts.

Gay and Scardina were fired last July, and Metropolitan went outof business shortly after the Chicago Sun-Times publicized theoverpayments.

The paper revealed last month that Gay had been receiving secretpayments from Metropolitan, disguised as salary for a purportedpart-time job with a Metropolitan affiliate. Gay is cooperating inthe federal investigation.

U.S. Attorney Anton R. Valukas, who announced the indictmentsWednesday, praised the Sun-Times for its disclosures in the case.

Also accused of fraud and conspiracy in the 68-page indictment -handed up Tuesday but sealed until Wednesday - are Jerry Coppola, 63,a former president of Metropolitan; Ronald Buzil, 38, the firm'svice president and controller, and Kathleen Mitropoulos, 48,Metropolitan's office manager. Another employee, Lawrence Sands, 62,was accused of lying to the FBI during the inquiry. Company also indicted

Metropolitan was indicted as a corporation on charges thatFlisk, 43, Coppola, Buzil and Mitropoulos, on behalf of the firm,also defrauded the company's chief creditor, Heller FinancialServices, of $5.6 million in loans.

The indictment seeks forfeiture by the defendants of allproceeds from those loans and from the $38.2 million diesel oilcontract, which was handed to Metropolitan in September, 1986, aftera lower bidder was disqualified on a rarely used technicality.

Nearly $20 million was paid out under the contract beforeMetropolitan folded last July.

Valukas told a press conference the alleged bribe to Medley camein April, 1987, as a phony "finder's fee" purportedly paid forhelping arrange the sale by Metropolitan of a warehouse at 4800 S.Central. Deception charged

To disguise the tie to Flisk, Valukas said, the money wasfunneled through Medley's accountant, John Wilson. Medley was alsocharged with lying about the transaction when questioned in Februarybefore a federal grand jury.

The indictment says Medley was promised $25,000 but got only$22,500.

Valukas said Medley twice tried to persuade another board member- who sources later identified as lawyer Natalia Delgado - to ignorea CTA audit that accused Metropolitan of delivering watered-downfuel, running a minority-contractor scam and trying to cheat the CTAout of an 11-cent-a-gallon "prompt payment" discount.

Delgado's purchasing and sales committee studied the charges butrecommended no action against Metropolitan.

Flisk, a real estate operator, was once branded a slumlord andwas fired as a special deputy sheriff six years ago after brandishinga revolver during a tenant dispute. Metropolitan was indicted last May on charges of cheating the stateout of more than $500,000 in sales taxes.

Tuesday's indictment also charges him with obstruction ofjustice for allegedly trying to persuade Gay and Buzil - the latteris cooperating in the investigation - to lie to authorities.

Flisk's attorney, Jeffrey Cole, said Assistant U.S. Attorney IraRafelson has told him he will seek a $400,000 cash bond when Flisksurrenders today. Cole said the maneuver "is a perversion of baillaws . . . to keep Flisk in jail."

The indictment charges that Gay accepted $14,200 from Flisk andthat Scardina received $4,250 plus "merchandise," which included awasher, dryer and gasoline. Scardina was also charged with lying tothe FBI about the gifts.

Tuesday's indictment is the second major corruption charge tohit the beleaguered transit authority within six months.

Last fall former chief administrative officer Larry Pianto wascharged with rigging $420,000 worth of contracts for a tire supplier,in return for $10,000 in bribes. Pianto pleaded guilty last month.

Other no-bid contracts valued at more than $10 million also areunder federal scrutiny.

Fran Spielman contributed to this story.