This piece was reported in collaboration with the Chicago Reader.

On March 5, Chicago's city council overwhelmingly voted to approve Mayor Rahm Emanuel’s proposal to divert $55 million of taxpayer resources into a new privately run hotel in the city's south loop. Coming just before Emanuel pled poverty to justify his push for pension cuts and property tax increases, the hotel handout was part of the mayor's expensive development plan that also features a basketball arena for DePaul University.

The vote followed a September decision by the mayor's appointees on the Metropolitan Pier and Exposition Authority to give Marriott the coveted contract to run the new hotel. The decision by the state-city entity could be a huge financial windfall for Marriott. After all, the company will be running one of America’s largest hotels next to America’s largest convention center - and doing so with massive taxpayer subsidies, but without having to pay to construct the hotel and without having to pay property taxes.

Amid self-congratulatory press releases, what Mayor Emanuel did not mention - and what has gone completely unreported until now - is what a joint investigation by PandoDaily and the Chicago Reader has now confirmed: in the year leading up to Chicago's lucrative giveaway to Marriott, the hedge fund of one of Emanuel’s largest campaign contributors bought millions of shares of stock in the hotel company.

A billionaire at the intersection of technology, finance and politics

That hedge fund, Citadel Advisors, is run by billionaire Kenneth Griffin, who is reputedly the wealthiest man in Illinois. He made his fortune at the intersection of technology and financial speculation, where his firm's computers now reportedly process one out of every eight stock trades made in the United States. In recent years, he has become famous in the financial world for marshaling computing power to make a killing on the kind of high-frequency trading Michael Lewis investigates in his recently published book, “Flash Boys.”

Griffin, though, is not just a financial speculator. He's also a savvy political investor. At the national level, he was a major fundraiser for Mitt Romney and in February he hosted a fundraiser at his home for New Jersey Gov. Chris Christie, whose state domiciles the East Coast stock exchanges that Citadel owns.

In Illinois, Griffin is an equally big political wheeler dealer, having given major campaign contributions to everyone from Mayor Daley to former Governor Rod Blagojevich to investor-turned-gubernatorial-candidate Bruce Rauner. That said, out of all the relationships Citadel has forged with politicians, few appear to be as close as the one the firm has developed with the Chicago mayor behind the Marriott deal.

Over the last three years, Griffin and his wife, Anne Dias Griffin, have donated more than $200,000 to Mayor Emanuel’s campaign. Griffin describes the mayor as his "good friend." Other Citadel employees have donated about $178,000 to Emanuel’s campaign. Additionally, in December, Emanuel appointed Dan Widawsky, then a top Citadel executive, as the city’s comptroller, overseeing the Department of Finance.

A Timeline of the Marriott Deal & Citadel Stock Purchases

On February 19, 2013, Mayor Emanuel and Illinois Governor Patrick Quinn (D) announced that the Exposition Authority would be building a giant hotel not far from the McCormick Place convention center. In May of 2013, they announced DePaul would be constructing the basketball arena events center. And on September 13, 2013, the Authority's board of directors, who are appointed by the mayor and governor, announced that they had chosen Marriott—over Hyatt and Hilton—to run the hotel. According to the Authority's spokeswoman Mary Kay Marquisos, the board did its due diligence through “a two phase process” of review.

In the months before the development deal was announced, Griffin's hedge fund was buying up large blocs of Marriott stock. According to SEC filings, Citadel purchased 1.6 million shares of Marriott stock in late 2012. By September of 2013, SEC filings showed the hedge fund owned 2.3 million shares of Marriott. As of the last SEC filings at the end of 2013, Citadel still owned roughly 1.6 million shares of Marriott stock worth an estimated $88 million.

According to Nasdaq figures, Citadel became - and remains - one of the 25 largest institutional owners of Marriott stock.

To give you a sense of the Chicago deal's potentially huge upside for Marriott and its shareholders, consider some key facts.

This will be a 1,200 room luxury hotel on prime land not far from a huge convention center in the third largest city in America - and it will be right near a new stadium. There’s also the prospect of even more business down the road for the hotel, should the mayor get state approval to put a casino in the vicinity, as is rumored (Griffin has been a strong opponent of bringing a casino to downtown Chicago).

Among the hotel’s amenities will be a 300-seat restaurant, a roof-top bar, a coffee shop, several banquet rooms, a fitness center and an indoor swimming pool. Best of all, from Marriott’s perspective, someone else is picking up the construction tab—the public. Indeed, with Mayor Emanuel’s subsidies and tax exemptions, Chicagoans property taxes will rise to pay for Marriott’s new crown jewel and to compensate for the property taxes Marriott will not be paying.

Contradicting Griffin’s “Free Market” Ideology

Ironically, Griffin's hedge fund bought stock in a hotel corporation benefiting from precisely the kind of taxpayer handout that runs counter to Griffin’s stated political ideology.

Remember, this is a guy who promotes himself as a right-of-center free market advocate. To that end, he has financed conservative causes like the charter school movement (he donated $500,000 to Stand for Children); he has given $300,000 to American Crossroads, Karl Rove’s Super PAC; and he has put roughly $1.5 million toward causes backed by the Koch Brothers, the billionaires who have funded efforts to bust unions, roll back environmental protections and defeat President Obama.

In speeches and interviews, Griffin has lashed out at business executives who put the needs of their companies over Illinois, when accepting tax breaks and public subsidies.

“Government being involved in picking winners and losers invariably leads to a loss of economic freedom and encourages corruption,” he told the Tribune last year.

Yet, the taxpayer financed Marriott project is very much one of those deals, directing public resources into a Tax Increment Financing (TIF) scheme that subsidizes a private hotel chain.

Pando and the Chicago Reader contacted Citadel to request Griffin's comment. After noting that Citadel had acquired Marriott stock, we asked if Griffin had an ideological objection to using public dollars to benefit the hotel corporation. In response, a Citadel spokesperson said via email: "We appreciate the opportunity to contribute to your story but are going to pass at this time."

The Chicago Mayor's office did not respond to telephone and email requests for comment from Mayor Emanuel.

How TIFs enrich the already rich

As previously reported by Pando and the Reader, TIF is a program in which Chicago annually diverts roughly $500 million in property taxes--paid in the name of schools, parks, police, etc.--into bank accounts largely controlled by the mayor. The money is supposed to be used to subsidize development in blighted communities that are so poor they would receive no development—but for the TIF.

However, state laws governing TIFs are so riddled with loopholes that Chicago's mayor is free to spend them virtually wherever and however he wants. That explains why the south loop—a relatively vibrant, well-off community—qualifies for TIF funding in the first place.

Keep in mind--TIFs divert property tax dollars from public schools that are so dead broke many of them can’t afford to buy basic supplies, like toilet paper. Moreover, the mayor is earmarking money to build the Marriott at the very moment he says he has to jack up property taxes and cut payments to pensioners because the city can’t afford to make good on its pension obligations.

In short, the city claims it doesn’t have money for its school children or retirees, but it somehow has plenty of cash to enrich a hotel corporation - one that just so happens to be part owned by the hedge fund of the mayor’s largest contributors.

In his speech last year to the Economic Club of Chicago, Griffin said that Mayor Emanuel should not have only closed 53 schools when he engaged in the largest school closure in Chicago's history. Griffin insisted that at least 100 schools should have been closed.

If Emanuel's south loop mega project for Marriott keeps siphoning off more desperately needed property tax dollars from the school system, Griffin may ultimately get his wish.

[illustration by Brad Jonas for Pando]