Ken Griffin Goes 'All In' to Make Mayor of Key Trading Hub the Governor of Illinois
Ken Griffin Is Going 'All in' to Unseat Illinois’s Billionaire Governor
(Bloomberg) -- You’d never guess that wealth and power in America converge here, at the intersection of Diehl and Eola roads, off Interstate 88, west of Chicago.
But not everything is as it seems in Aurora, Illinois.
This unassuming city -- the setting of “Wayne’s World,” the Mike Myers and Dana Carvey comedy about two dweeby metalheads with a public-access TV show -- has suddenly become a big-money political battleground.
On one side is hedge-fund billionaire Ken Griffin, a rising power in Republican money circles. On the other is Governor J.B. Pritzker, a Democrat and billionaire heir to the Hyatt Hotels fortune.
Griffin, founder of Citadel, is the richest person in the state, and one of the richest anywhere in the country, with a net worth of about $30 billion, according to the Bloomberg Billionaires Index. He’s poured tens of millions of dollars into this year’s congressional races and has vowed to go “all in” to see that Pritzker is voted out, too.
The Citadel chief’s pick for Illinois: none other than Aurora Mayor Richard Irvin. So far, Griffin has pledged $20 million to Irvin’s campaign, the rough equivalent of half the money he’s sunk into the midterm elections.
Griffin, 53, is a major donor to Republicans nationwide and has begun to hint at political ambitions of his own. But Aurora has a special meaning to Citadel and other financial firms because the city is home to a massive exchange.
While the Chicago Mercantile Exchange is headquartered more than 30 miles away, virtually all the trading happens between computers here in a data center on Diehl Road. Dish antennas attached to towers are crucial to making this work and enabling firms to keep pace with rivals. That’s because the antennas beam buy and sell orders to other financial markets in Chicago, the U.S. East Coast and elsewhere around the globe.
Griffin has said Irvin only came to his attention a few months ago, but the mayor has been a presence in Citadel’s world for some time. Irvin, 52, has served as a sort-of gatekeeper for high-speed traders -- firms that author Michael Lewis dubbed “flash boys” -- seeking to access the CME data center.
As Bloomberg Businessweek reported in 2019, he helped a local company, Scientel Solutions, win permission to erect a communications tower despite initial objections from the city council -- and allegations from the data center’s operator that the structure would interfere with efforts to grant fair access to the exchange.
A September 2016 email subsequently obtained by Bloomberg shows that Scientel had helped Citadel Securities, Griffin’s giant market-making outfit, build a wireless network. Representatives at Citadel and Scientel declined to comment on business relationships.
Irvin has his own ties to Scientel. Its chief executive officer, Nelson Santos, is a friend, according to a person with direct knowledge of the matter. In June 2019, the mayor, a Scientel executive and several other people flew to Puerto Vallarta, Mexico, on a private plane, according to the flight manifest.
Scientel, Santos and others associated with the company have donated at least $135,500 to Irvin and a political fund run by his former campaign manager, WTTW, the Chicago Public Broadcasting Service channel, reported in March. Many of the donations predate Irvin’s run for governor, state records show. Scientel, meantime, has received millions of dollars’ worth of contracts from Irvin’s city, according to WTTW.
Accepting campaign contributions from people who win or seek government contracts isn’t illegal, and lots of politicians do it. Good-government advocates say it can erode public trust.
Eleni Demertzis, a campaign spokesperson for Irvin, said the mayor follows the rules with respect to his job and campaign contributions. She declined to comment on Irvin’s relationship with Santos, Griffin or their respective companies. Citadel Securities, in a statement, said it “has not had any engagement with Richard Irvin on any aspect of its business.” Asked about the mayor’s 2019 flight to Mexico, Santos said Scientel hasn’t paid for anyone to take trips.
GOP Kingmaker
Griffin has contributed to Democrats as well as Republicans over the years. But his potential as GOP kingmaker -- not only in Illinois, but around the nation -- has political circles buzzing. Only last week the Wall Street Journal called him “a top force behind the GOP’s drive to retake Congress in November.”
Griffin certainly has been active in Illinois, Citadel’s home state. In 2014, he helped elect as governor Bruce Rauner, a friend and private-equity executive from the Chicago suburbs. Rauner, a multimillionaire Republican, ended up alienating voters on both the left and right.
In 2018, he lost to Pritzker, whose campaign issues included proposing that the wealthy pay more in taxes. Griffin spent millions to block that proposal. He’s since become an outspoken critic of the governor, particularly over gun violence in Chicago, which is run by Mayor Lori Lightfoot.
“Chicago is like Afghanistan, on a good day, and that’s a problem,” Griffin told the Economic Club of Chicago in October. The comment echoed remarks made in 2019 by President Donald Trump, which provoked widespread criticism including an Associated Press article declaring the comparison “not true.”
In background and politics, Irvin has little in common with Pritzker, a philanthropist and venture capitalist from a prominent Chicago family. Irvin grew up in public housing in Aurora and enlisted in the Army out of high school.
He said in a December 2018 interview with Bloomberg Businessweek that he vowed to devote himself to public service after surviving a missile attack during the Gulf War. He went on to become a lawyer and work as a prosecutor. He was elected to the city council in 2007 and became Aurora’s first Black mayor in 2017. He was re-elected last year.
Irvin, supported by prominent Republican politicians and conservative groups, has emphasized a tough-on-crime message.
“When I was a prosecutor, I’d go around with these guys,” Irvin said in a recent campaign ad, in which he appears to be sitting in a police car. “We raided crack houses and busted up gangs.” He added, “All lives matter” -- a contentious rebuttal to the Black Lives Matter movement that some consider misguided or offensive.
Griffin has praised the mayor’s experience as a prosecutor and his willingness to work with businesses.
“Richard understands the importance of making businesspeople know that he understands the joint prosperity that comes with a successful business community,” Griffin said in an interview published in February by the Better Government Association. He likened Irvin to Richard M. Daley, Chicago’s Democratic mayor from 1989 to 2011, who was supported by the city’s traditionally Republican business community.
“The mayor made clear that he had my back, that I could be comfortable making the investment in infrastructure, in talent, and in building Citadel,” Griffin said of Daley in that interview. “I know with Richard Irvin I’m going to have that feeling again.”
In a statement, a Citadel Securities spokesman said: “Conspiracy theories aside, Ken’s support for Richard Irvin is solely based on the belief that Mayor Irvin is the best candidate to tackle the severe problems facing Illinois.”
Arms Race
In Aurora, trading firms started jostling for position around the data center -- trying to gain an edge on competitors -- in 2015, when high-frequency trader DRW Holdings mounted an antenna on a utility pole near the CME data center. To keep up in this technological arms race, rival Jump Trading bought property across the street for its own antenna. So did Scientel, which picked up several acres for its new headquarters and eventually erected a tower, too.
Scientel isn’t part of Citadel, but competitors have suspected for years that they work together.
Those inklings are borne out by an email between the two. Shortly after Scientel bought the land in Aurora in 2016, two of its executives received an email from a person they were working with at Citadel Securities. The network they’d built together was beating the competition, the sender wrote, and a Citadel boss was impressed.
“We absolutely can’t f*ck this up,” the email from Citadel Securities reads. The goal for Griffin’s firm was to “position ourselves to build a lot more.”
Before long Scientel was proposing to erect a 195-foot tower. The company that owns the CME data center, CyrusOne, complained that would interfere with its 350-foot tower.
The city council sided with CyrusOne, 7-to-3, over strong objections from Irvin.
But the mayor didn’t give up. He had staffers lobby the alderman, emphasizing Scientel’s contention that only the Federal Communications Commission -- not Aurora -- could legally decide whether one tower might interfere with the other, according to the 2019 Bloomberg Businessweek article. The matter was put to a second vote in January 2018, and this time, the council okayed the plan, 9-to-3.
Two days later, Santos, the Scientel CEO, emailed to company employees pictures of himself and his team celebrating with Irvin at a Mexican restaurant near City Hall.
“Winning is fun!” came a reply from one Scientel employee, who added a smile emoji.
Alderman Rick Mervine didn’t reverse his “no” vote. Now retired from city council, he recalls the Scientel tower being a major focus for Irvin.
“From what I understood, he and his team were reaching out directly to the aldermen to sway their opinion,” Mervine said. “I didn’t like anything about it.”
Scientel put up its tower in early 2019.
Soon after, Scientel and CyrusOne settled their dispute, and Scientel placed some of its own equipment on the soaring CyrusOne tower. According to a person with direct knowledge of the matter, Scientel only sought to connect the antenna to one firm inside the data center: Griffin’s.
The Citadel Securities spokesman said his firm doesn’t use the Scientel tower. He declined to comment on the CyrusOne tower.
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