Four Corners: Sanitary District Scandal

Frank Borror East Peoria Historical Society president
Jesse Hall as pictured in his political ad from the April 25, 1927, edition of the East Peoria Courier.

EAST PEORIA — A coalition of big taxpayers brought about the downfall of a corrupt East Peoria political organization in the early 1930s. This coalition of local manufacturers and railroads, led by spokesman E. Bornstein, secretary of Caterpillar Inc., brought forth enough evidence for State’s Attorney Nathan T. Elliff to indict Jesse Newton Hall and his henchmen on embezzlement charges. 

Jesse, a native to Norris, Illinois, began his political career as an East Peoria Village Councilman in 1914 and served two one-year terms. He was elected mayor of the Village of East Peoria in 1917 for a term of two years when East Peoria adopted a commission form of government. He followed this by being reelected mayor of the City of East Peoria for four years in 1919. He was again elected to four year terms of mayor in 1927 and 1931 and to the Illinois State House of Representatives in 1932. Following the 1927 flood, the East Peoria Sanitary District was formed and Jesse used his political connections to be appointed as president. The 1930 United States census also reports Jesse as a game warden.

As City Mayor and Sanitary District President, Jesse appointed former State Senator, Ben L. Smith as legal counsel for both of these entities. Smith also served as legal counsel for the Fondulac Park District and the East Peoria High School District. Other members of the “Hall Gang” included Eugene P. Welcher, secretary of the Sanitary District, Louis Maybee, James W. Betson, Homer Massey and Cecil Minniger. The later three were prosecuted for their part in the 1932 kidnapping of Peorian Dr. James W. Parker and were serving time in Joliet State prison at the time of Jesse Hill’s indictment.

It appears that Hall’s graft commenced with his election as mayor in1927. City payments were made to James Betson and others for services that were never performed and the money then given to Hall. Hall also accepted kickbacks from contractors performing work for the city. Conrad Iber stated under oath he paid Hall $1,700 dollars to receive a city contract, without bid, to build a reservoir for the city water system. The formation of East Peoria Sanitary District in 1928 afforded new opportunities for both Hall and Eugene Welcher to fleece the taxpayers. In addition to payments for services not rendered and kickbacks for projects, a scheme was concocted whereby sellers were paid an inflated amount for their property purchased as right-of-way for the sanitary district. They then shared the extra profit with Hall. 

Some 11 houses were rehabbed with sanitary district money but retained in title by James Betson. Betson transferred title of three of these homes to Welcher, who rented them for profit, and Betson sold the other eight and shared the profits with Hall. In one instance where sealed bids were taken for a contract on a sanitary district project, Hall and Welcher took the sealed envelopes to Hall’s home, steamed the envelopes open, recorded the bids and then resealed the envelopes. The information was relayed to William Swords in return for payment to Hall and Welcher and Swords then presented the low bid.  

Hall’s most innovative plunder involved his relationship with a Chicago bonding firm, H. C. Speer and Sons, Co. With his position in the city and sanitary district coupled with his influence on the park and school boards he brokered the issuance of over $350,000 bonds without bids and received payments from the bond company for his effort. In one instance, when park district attorney J. W. Reardon opposed issuing more than $27,000 in bonds to cover a judgement from actions caused by Hall, Hall engineered Reardon’s firing and the appointment of Ben Smith as park district counsel. The park district then issued $82,000 in bonds.

Hall also used his influence in persuading the park district to award a no bid contract to Louis Maybee in the amount of $39,640 for the construction of a swimming pool. The entire contract was sublet to Conrad Iber for $11,440. When plumbing work was added, the park paid over $50,000 for a pool smaller than one that cost Peoria Country Club $18,000. Herbert Railsback Dennis, president of the First National Bank of East Peoria also became involved. Dennis, who had earlier handled the purchase of bonds in a number of cases in East Peoria, felt he should have the opportunity to bid on the bonds. Dennis made this fact known to the bond house and rather than upset their arrangement, it was agreed between H. C. Speer and Sons Company and Hall and Welcher to pay Dennis $1,000 and to pay Hall and Welcher each an additional $1,000 through Dennis. When the check was cut to Dennis for $3,000 he refused to share with Hall and Welcher. Dennis resigned his position with the bank shortly after.

States attorney Nathan T. Elliff revealed Hall and his henchmen, by unlawful acts, had obtained over $144, 000 of public funds; by today’s standards that was equivalent to over $2,500,000. On May 7, 1934, Hall pleaded guilty to embezzling $35,000 for the East Peoria Sanitary District and Tazewell County Circuit Judge Joseph E. Daily sentenced him to serve one year at the Vandalia Prison Farm and fined him $1,000. W. O. Somerfield was appointed to fill Jesse’s term as mayor and then reelected for an additional term.

Compiled March, 2016 by Frank Borror