Quinn, business execs rip Hynes over computer case

January 20, 2010 7:15:22 PM PST
Illinois Gov. Pat Quinn on Wednesday accused primary challenger and state Comptroller Dan Hynes of the attempted "cover-up of a stock manipulation scheme conducted by his employee, using a state computer on state time."Quinn's criticism follows an ABC7 I-Team report that revealed one of Hynes' state accountants was under investigation by state and federal authorities for posting thousands of messages on investor websites that attacked the stock prospects-and executives-of numerous small companies.

The ABC7 I-Team reported that comptroller's employee David Pippy is now under investigation by the Illinois Secretary of State and the U.S. Securities and Exchange Commission for possible stock manipulation.

The I-Team also learned that Mr. Pippy is back on the job, working as an accountant in the Springfield office of the Illinois' comptroller, although apparently without internet access.

At a Tuesday news conference, Comptroller Hynes stated that Pippy had been thoroughly investigated and suspended for an undisclosed period of time. A spokesperson later said the suspension was without pay but refused to provide the length of the suspension.

"Comptroller Hynes responded by giving his politically well-connected employee a slap on the wrist" said Gov. Quinn's campaign communications director in a press release on Wednesday.

Also, executives of a Las Vegas company are demanding answers and action from Hynes for what they call "thousands of malicious, fraudulent (and) defamatory comments" posted by a high-ranking employee of Hynes' state comptroller office.

In a letter to Hynes obtained by the I-Team Prime Star Group CEO Roger Mohlman describes how the unending negative web posts by the comptroller employee caused the online investor company stock to dive.

"You need to answer for the actions, and inactions, of your office" Mohlman tells Hynes. " What on earth is going on in that office?"

Mohlman's ex-wife Donna, a shareholder in Prime Star Group, told the I-Team: "I actually thought that Dan Hynes would be THE guy that was going to stand up and take a stance for small cap companies that were being bashed by shorters. He could have made such a big difference in so many people's lives and instead we got a letter that was basically telling us to kiss off."

Comptroller Hynes on Wednesday denied that he neglected complaints filed by any companies concerning Pippy's misconduct. Hynes repeatedly said that he and his investigators properly turned over the matter to state and federal authorities.

Executives for Prime Star Group and at a Chicago textile firm say they are planning to file lawsuits because of the online stock attack.

"Here is a gentleman who is at work who is using a state computer, being paid by the taxpayer, who is attacking companies," said Stephen Macklem, CEO of Veltex, a small textile company headquartered in Chicago.

Macklem says that last year, as Veltex stock plummeted, company executives discovered hundreds of extremely negative postings by some named Sky-King on an internet financial forum-that stated "beware of this stock do not buy...not a good things for stockholders"...and "loser CEO and company."

Comptroller Hynes and his top deputies contend that Pippy was disciplined in keeping with office policies and guidelines.

Macklem maintains that a suspension is far less punishment than the behavior demands."Similar to what you would do to your kids if you caught them surfing websites that are inappropriate. This is a little more than that," said Macklem.

"As soon as we found out about an employee who was using a state computer improperly by selling stocks or posting messages on the internet, we suspended him and we referred it to the SEC and proper authorities," said Dan Hynes, (D), state comptroller and candidate for governor.

Hynes and Pippy are not strangers. In a 2003 photo obtained by ABC7's I-Team, the men are seen shaking hands following a labor contract negotiation. At the time, Pippy was president of the teachers union local, which represented some comptroller office employees.

The Illinois Federation of Teachers has endorsed Hynes, but a spokesperson said Pippy had no role in that endorsement nor is he involved in the union any longer.

The Illinois Federation of Teachers described Pippy's actions as a "personal vendetta" against private companies that has nothing to do with either the union or the Hynes campaign.

However, the case has everything to do with the state comptroller's office that Hynes currently occupies. ABC7 called Pippy at his office on Tuesday, but he declined to comment and hung up.