Local contractor files lawsuit, accuses city workers of nepotism

SOUTH BEND, Ind. -- Cities across Indiana are scrambling to pass their own nepotism policies ahead of a July first deadline.

In March, Gov. Mitch Daniels signed a bill requiring all local governments to pass laws that stop officeholders from hiring relatives, or giving contracts to relatives without disclosing it.

Monday, the South Bend Common Council passed the mayor's newly proposed nepotism ordinance 6-3.

The bill would not only extend the law to public officials but to all city employees. 

ABC 57 News talked to one local contractor who said it is a huge problem with certain city departments and said it is hurting his bottom line.

Jesse Davis owns and operates Emergency Drain Service. Davis does anything from drain cleaning and excavating, to installing septic tanks.

His company is also bonded and insured to do work for the City of South Bend, through its sewer insurance program. It's a program that is set up to help make sewer repairs more affordable for homeowners, while still allowing people to use private contractors.

Davis was a private contract of the program up until a couple of years ago when he noticed he was not getting as much work as he used to. 

"I happened upon a company that nobody knew of, that I had never seen, with any lettering on vehicles, out digging up one of our customers up in particular," said Davis.

Davis said he started looking into the company and discovered the owner of the company was a long-time friend of a city employee. He said, soon enough, he discovered several other instances where city employees were handing out sewer work and even large contracts to companies owned by relatives.

"A lot of jobs and millions of dollars worth of work is being fed out to certain companies, which basically is benefiting city employees' families," said Davis.

Davis said unethical practices became apparent to him after he learned of a contractor's list. A list that, at first named several local contractors including himself. 

However, that list is much different from the one a customer of Davis' says they received from a city employee more recently, which only lists two companies that, Davis claims, have close ties to city workers.

"A lot of local contractors have had to lay people off because of these practices," said Davis. 

That is why Davis filed a lawsuit that is now being amended and refiled by his attorney. The city has since responded with a counterclaim that denies his allegations. It also denies a 'list' even exists.

ABC 57 News caught up with Acting City Attorney Aladean DeRose at the Common Council meeting

Monday night. Derose said there's no official list and did not want to comment any further when pressed about the list. Instead, DeRose directed all questions to Mr. Gilot, of the Department of Public Works. 

Gilot is serving as a temporary consultant for the department until a permanent director is named. ABC 57 News is awaiting a call back from Gilot. Meantime, Davis said he is moving forward with his lawsuit.