Daley's longtime patronage chief was accused of systematically circumventing a decades-long federal ban on most political hiring by secretly directing top city managers to hire "preselected" applicants favored by politicians and union officials.
"Now is the time to cooperate because this train is leaving and you're either on the train or you're on the tracks," said Robert Grant, special agent in charge of the FBI's Chicago office.
For the first time, a high-ranking official in Daley's office was arrested and charged in the probe. Cooperating city officials told investigators that Robert Sorich, Daley's patronage chief and a family friend, orchestrated hiring efforts that often favored "goofballs" over more qualified candidates.
U.S. Atty. Patrick J. Fitzgerald, who has charged former Gov. George Ryan and other state politicians on similar allegations of mixing campaign and public payrolls, said he hoped the ongoing probe would shake a City Hall "where people are being scored not on the merits but by who they know or what clout they have."
"That's the world we want to stop," Fitzgerald said.
Daley issued a four-sentence statement Monday pledging cooperation with investigators.
"These are clearly very serious accusations," Daley said. "As I have always said, if there are individuals who have violated the law, they should be prosecuted and held accountable for their actions."
The Daley administration has been trying to overturn the 1983 Shakman federal court decree prohibiting political hiring at City Hall, arguing it was no longer necessary.
But the charges against Sorich and Patrick Slattery, another official with strong ties to the Daley family and its 11th Ward Democratic Organization, challenged the mayor's contention that who one knows does not count for much anymore at City Hall.
The city allegedly passed over equally qualified or more suitable applicants to assure jobs for political campaign volunteers. Prosecutors described situations where a dead man and a soldier serving in Iraq were rated as qualified for jobs with the city even though they could not have been interviewed, as officials had claimed on city documents.
"The hiring system was rigged," Fitzgerald said.
Overseeing the entire operation that tied together street-level Chicago politics and City Hall hiring, prosecutors said, was Daley's Office of Intergovernmental Affairs.
IGA "routinely and consistently" corrupted the hiring process by falsifying test scores and other credentials to benefit the politically connected, prosecutors said. Sorich and other officials in IGA allegedly directed political armies made up of city workers to work for the mayor and other politicians.
Charges focused on hiring had been widely expected since late April, when federal agents raided IGA and two other city departments for personnel records. That move prompted the administration to announce an overhaul of its hiring process.
A long-running investigation of bribes paid to get city work for private trucking firms began to focus on hiring when prosecutors alleged that some city officials ensnared in the Hired Truck scandal built political armies by trading jobs, raises and promotions for campaign help.
The Shakman decree stated that merit, not clout, should be the basis for filling all but about 1,000 policymaking positions from among the 38,000 jobs on the city's payroll.
Michael Shakman, the Chicago lawyer who won the court decree, said the problems in hiring appear to be far more widespread than the mayor has acknowledged. Shakman called the alleged activity by city officials "an appalling betrayal of public trust."