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Contractors asked police to probe top aide of Aurora Mayor Richard Irvin over aide’s efforts to fund wife’s business

When Richard Irvin became mayor of Aurora five years ago, he named Michael Pegues — a close childhood friend — as one of his most trusted aides at Aurora City Hall.

In addition to naming Pegues as Aurora’s chief information officer, Irvin also empowered him to help run OnLight Aurora, a quasi-city agency that managed and sold access to government-owned, high-speed internet lines.

But by 2018, Pegues’ leadership came under scrutiny. Records show that, while he was chairman of OnLight’s board, it sponsored events for his wife’s upstart business. And two contractors told police that Pegues fired them for not paying to sponsor his wife’s events.

Pegues told the Tribune he didn’t do anything improper, and Irvin has not been implicated in any wrongdoing.

But the allegations are taking on new relevance as Irvin battles to win the Republican nomination for governor on Tuesday. partly on his record as a reformer running Illinois’ second-largest city.

Irvin declined to be interviewed for this story. In a statement, Irvin’s campaign spokesperson said Irvin knew about the accusations made against Pegues and directed him to “cease these actions,” but wouldn’t say which actions. Irvin’s spokesperson also said Pegues was cleared of wrongdoing by an “independent law firm” that Irvin had hired to investigate Pegues’ conduct, but neither the campaign nor city would offer additional details.

It’s unclear precisely how much money was involved because OnLight has repeatedly declined to release its payment records to reporters.

Although Pegues told the Tribune he never pressured anyone to sponsor events, Aurora police asked the FBI to investigate the contractors’ claims and one of the contractors told the Tribune that FBI agents interviewed him last year. The FBI declined to comment.

Court records show OnLight had to pay the two contractors more than $50,000 after an arbitrator determined OnLight had used a flimsy excuse to fire them, although the alleged pressure tactics were not raised in that case.

Irvin and Pegues have long been close, so much so that Irvin calls Pegues a stepbrother. Though they are not related by blood, Irvin’s biological father at times raised Pegues.

Earlier this month, the Tribune documented how the two men quietly co-founded a consulting firm together after Irvin became mayor — a business city records now show was assisted by the use of city employees who helped edit drafts of their firm’s paperwork.

Pegues joined Aurora City Hall in 2017 following a career helping oversee information technology in the corporate world.

Within a year of Pegues’ hiring by Aurora, state records show his wife began an event-planning firm called NexGen Entertainment. Pegues told the Tribune he helped launch the company by offering “unofficial guidance and moral support,” as well as taking phone calls at times for his wife, who is not a native English speaker.

In 2018, NexGen’s Facebook page advertised more than a dozen comedy shows, mostly at two restaurants in Aurora. Fourteen shows — nearly all of NexGen’s — listed OnLight as a sponsor, even featuring OnLight’s sign beside the stage. Some of NexGen’s Facebook page postings included pictures of Pegues at NexGen events.

OnLight is technically a nonprofit, with a for-profit arm, according to state and federal records. But its attorney has argued in court that OnLight operates like part of the city, which helps fund it. In addition to Pegues being OnLight’s board chairman, Irvin also sits on OnLight’s board, as does an Aurora alderman.

While OnLight’s sponsorship of NexGen was no secret online or at the events, Pegues said he didn’t seek or need approval from the rest of OnLight’s board. He said that was because the money came from the for-profit arm of OnLight, which he said was overseen by just him, not the board.

Irvin’s campaign told the Tribune that the mayor initially didn’t know OnLight money was being used to help fund Pegues’ wife’s firm. Neither did another board member reached by the Tribune, Aurora businessman Kevin Fitzpatrick.

“I would have (asked) … what benefit is it to OnLight Aurora?” Fitzpatrick said.

On June 10, the Tribune requested records of OnLight’s payments to NexGen. The request was made to Irvin’s campaign, the city and Pegues. None provided records. Pegues told the Tribune last week that he thought the amount was near or below $5,000, but that he was working with an OnLight staffer to get the precise amount.

In defending the payments, Pegues said the sponsorship fit with OnLight’s greater goal of promoting social responsibility, through advertising that helped the local community.

He said some proceeds from the NexGen events went to charities but he couldn’t offer specifics.

Regardless, around the end of 2018, Facebook posts about NexGen shows stopped, and NexGen soon dissolved as a corporation — but not before Aurora police got a visit from two men who’d done work for both the city of Aurora and OnLight.

In September 2018, the two men walked into the lobby of the Aurora Police Department and asked to see a detective. The report redacts the men’s names, but Tom Cane told the Tribune it was he and his business partner, Tim Horstman, of the firm Raxity. Horstman declined to comment.

The ex-vendors told two detectives that, sometime in fall 2017, Pegues asked their firm to sponsor a NexGen event.

The pair told police that they told Pegues they couldn’t afford it, then said Pegues responded that, “in order to play the game, you have to sponsor an event to keep city contracts,” according to the police report.

Pegues told the Tribune that he “never said anything of the sort.” And in earlier court testimony, Pegues argued his relationship with Raxity soured because Raxity didn’t do good work.

Records show OnLight fired Raxity from its $9,000-per-month job in May 2018. Around that time, the city also stopped using Raxity for separate work that had paid the firm roughly $32,000.

OnLight then replaced Raxity with a firm that had sponsored NexGen’s shows: Scientel Solutions.

The telecommunications firm by then had gotten Irvin’s help to get city approval for a lucrative tower that critics complained would unfairly benefit some Chicago Mercantile Exchange traders. In 2018, Scientel also was on its way to becoming one of Irvin’s biggest political donors — at least until a $50 million influx this year from billionaire trader Ken Griffin, who Bloomberg has reported has had business ties to Scientel.

A Scientel spokesman said the firm sponsored NexGen events “to introduce the company to Aurora residents and to support Aurora’s arts and entertainment community.”

Neither Scientel nor Pegues provided the amount that Scientel paid to NexGen.

The police report shows the Raxity vendors alerted detectives about the ties between NexGen, OnLight and Pegues. The police report shows that a detective documented those ties, including printing off copies of websites and social media pages.

A detective also documented calling others tied to local businesses — whose names were redacted. According to the police report, those people told police that either they hadn’t been approached by Pegues for money or, if so, didn’t feel they were improperly pressured.

The Raxity contractors told Aurora police that they’d already spoken with the FBI, and said the FBI told them to report the allegation to Aurora police as well, according to the police report. Records show the Aurora police, in turn, asked the FBI to pursue the case, citing an “apparent conflict of interest as it involves a city employee, appointed by the mayor.”

Cane said the FBI spoke with him about the allegations in spring 2021. Pegues told the Tribune that the FBI never interviewed him about the allegation.

Irvin campaign spokesperson Eleni Demertzis said in a statement that once Irvin learned of OnLight’s sponsorship of NexGen and the contractors’ allegations, he commissioned an investigation that determined Pegues did nothing wrong.

“When it was brought to his attention, Irvin hired an independent law firm to conduct an investigation into the allegations which found no wrongdoing,” Demertzis said. “Mayor Irvin directed Pegues to cease these actions, and none have taken place since then to his knowledge.”

The campaign did not elaborate on what actions the mayor directed Pegues to cease, and why — if a law firm found no wrongdoing — the mayor asked Pegues to stop anything. Neither the campaign nor the city provided any details on the law firm’s work, including the firm’s name, when it did the work, how much it was paid, who paid it, or any other details about what the firm found had occurred.

In an interview, Cane said he was never contacted by any law firm conducting an investigation into Raxity’s claims.

The Tribune filed a Freedom of Information Act request with the city for records that would include any internal investigations of Pegues. The city provided no records of a law firm report on the episode.

OnLight’s records have not been made public for years. In 2019, the Aurora Beacon-News requested from the city OnLight’s records of payments to NexGen, among other records. But the Irvin administration claimed OnLight wasn’t required to do so under the state’s open records law.

Amid the contractors’ civil claims of being unjustly fired, their allegations about Pegues never came up, according to a Tribune review of court records, which showed the case was focused on purely contractual issues.

In 2019, an arbitrator concluded that Pegues and Keith Gerald, OnLight’s then executive director, used a “fabricated excuse” to fire Raxity. OnLight was ordered to pay Raxity $51,526.44. Gerald no longer works at OnLight. He did not respond to a voicemail seeking comment.

And in 2020, the Irvin administration agreed to pay Raxity $4,500 to settle claims the city hadn’t paid Raxity what it owed the firm for city work.

But Cane said Raxity spent far more on legal fees than it recovered, and the firm ultimately went out of business.

Pegues told the Tribune that he understands, particularly in a heated political season, how some may criticize his actions with OnLight.

“Everybody’s individual perception is going to be different,” he said. “But if you want to be objective, just look at the facts.”

City records don’t show any discipline of Pegues, including anything related to OnLight. He’s maintained a major role in city government where his salary has increased to $160,677 from his starting salary in 2017 of nearly $130,000, city compensation reports show.

He’s become the mayor’s point person on a high-profile push for Aurora to become a “smart city,” where internet speed and connectivity reshape how the city functions, lures businesses and helps residents. The plan has since stalled, but in announcing one step of the process in 2019, Pegues shared the stage with Irvin and the man Irvin hopes to unseat: Democratic Gov. J.B. Pritzker.

And Pegues added another dimension to his relationship with the mayor.

The Tribune previously reported how the two quietly created a business together. When asked about it, Irvin’s campaign has said they set it up in case Irvin lost his 2021 mayoral reelection bid and that the two men didn’t plan to do work with the firm unless and until Irvin left office.

But after Irvin won reelection as mayor last year, the pair kept up business filings, and newly released city emails show Pegues, since 2021, used three city employees, during traditional work hours, to help format or edit the firm’s paperwork. Also, last fall, Pegues emailed the mayor to check out draft paperwork, using both their city email accounts in the middle of a work day. The mayor quickly forwarded it to a mayoral assistant, without writing anything in his email to the assistant.

In explaining the mayor’s email, city spokesman Clayton Muhammad said Irvin forwarded it to the assistant and “instructed her to remind staff not to send emails that do not pertain to official business to his city account.”

As for Pegues’ actions, Muhammad said that — based on the Tribune’s review of city emails — “there is some evidence that Mr. Pegues may have requested or required employees under his direction to review or revise documents unrelated to his official duties while on city time and with city resources.”

If found to be true, Muhammad said, Pegues could be disciplined for that.

Steve Lord of the Aurora Beacon-News and Chicago Tribune’s Jason Meisner and Sarah Freishtat contributed.

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