Kirk seeks investigation of federal disaster funds

Republican U.S. Sen. Mark Kirk is asking federal officials to open an investigation into millions in federal disaster relief funds that Democratic Gov. Pat Quinn's administration used for a now-defunct anti-violence program.

Kirk said Friday he sent a letter to the U.S. Department of Housing and Urban Development regarding the Hurricane Ike recovery funds. The money went to financial institutions to disburse loans to small businesses in struggling Chicago neighborhoods as part of the Neighborhood Recovery Initiative.

A state audit earlier this year found "pervasive" problems with the program, including misuse of funds, and concluded it was hastily put together and mismanaged.

Federal and Cook County prosecutors and a legislative commission already are investigating, but Kirk said in his letter he wants to ensure there's also oversight of the $5 million in federal dollars earmarked for the loans.

"I expect the HUD Inspector General to learn who received the aid, were they victims of disaster, and what was done with the money," Kirk said in a statement.

Quinn started the Neighborhood Recovery Initiative shortly before his 2010 election to help curb violence in Chicago neighborhoods. He has denied Republican claims that he used it to curry favor with voters and says he addressed problems with the initiative, including abolishing the agency that ran it.

The Chicago Tribune reported Friday that $3.7 million in disaster funds went to institutions to distribute the loans. One of those institutions, Chicago Community Ventures, had previously misspent grants. It never loaned any money, but kept $150,000.

Dave Roeder, a spokesman for the Department of Commerce and Economic Opportunity, said Friday the $150,000 was for administrative costs the organization incurred before the state recognized Chicago Community Ventures was failing and unable to carry out its work.

He said loans already in progress were transferred to another organization, so the $150,000 was not lost money. He also said the group's previous troubles didn't surface until after it was selected for the Neighborhood Recovery Initiative.

The Tribune also reported that the Quinn's then-chief of staff, Jack Lavin, had previously worked for Chicago Community Ventures.