The Mirage Tavern: Chicago’s Undercover Sting That Exposed Rampant Corruption
If you found yourself in Chicago in 1977 and wandered into a small drinking establishment at 731 N. Wells Street, you might have thought you’d stumbled into just another neighbourhood tavern. The place had all the hallmarks of a typical bar—a jukebox, a cash register, the comforting clink of glasses, and the faint hum of small talk. But this wasn’t an ordinary watering hole. This was The Mirage Tavern, a cleverly engineered undercover operation designed to expose corruption in city and state regulatory departments.
The Mirage was not owned by a shadowy syndicate or a group of seasoned bar owners looking to make their mark on the Chicago nightlife scene. Instead, it was purchased in May 1977 by an unusual duo—Chicago Sun-Times journalist Pam Zekman and Better Government Association (BGA) chief investigator Bill Recktenwald, who posed as Mr. and Mrs. Ray Patterson. Their goal? To investigate the widespread allegations that small businesses in Chicago were routinely shaken down by city inspectors, forced to pay bribes to overlook code violations, or risk bureaucratic hell.
Setting the Trap
The Mirage was the brainchild of an editorial team consisting of James Hoge, Ralph Otwell, Stuart H. Loory, and Joseph Reilly, all determined to find a way to capture corruption in action. They knew that reporting on bribery was one thing, but documenting it with irrefutable proof was another. So they set up an elaborate operation, placing undercover reporters and investigators in key roles.
Pam Zekman and Bill Recktenwald posed as the new bar owners.
Zay N. Smith, a Sun-Times reporter, played the role of the bartender.
Jeff Allen, an investigator with the BGA, took on the role of the tavern manager.
Gene Pesek and Jim Frost, Sun-Times photographers, disguised themselves as repairmen. They had an important job: capturing the corruption as it happened, taking photographs from a hidden section of the bar built above the washrooms.
With everything in place, the team simply had to wait for the city’s inspectors to come calling—and they didn’t have to wait long.
Corruption, Chicago-Style
It turned out that city inspectors operated under a remarkably predictable system, one the journalists would later dub the “supermarket approach to graft”—low prices, high volume. The shakedowns were usually small, rarely more than $100, but they happened frequently and across multiple agencies. It was clear that these officials weren’t looking for one big payday but rather a steady flow of illicit income.
Among those caught in the sting were:
A city electrical inspector, who was more than happy to ignore dangerously faulty wiring for the right price.
A fire department lieutenant, who signed off on the bar’s grand opening despite exposed electrical wires hanging from the rafters and piles of flammable trash in the basement.
A city health inspector, who ignored the maggots in the bar and didn’t mind that the sink drains emptied directly onto the basement floor.
A state liquor inspector, who was unfazed by fruit flies buzzing around the liquor bottles.
The Mirage also uncovered illegal kickbacks from A.A. Swingtime Music Company, which controlled the placement of pinball machines and jukeboxes in bars, as well as rampant tax fraud.
One of the most egregious figures in the operation was Philip J. Barasch, a local accountant who gave the new bar owners an in-depth tutorial on tax evasion. He walked them through the process of keeping two sets of books—one real, one fake—to skim profits and avoid paying taxes. He even advised them on when inspectors typically showed up and how much their bribes would cost.
Barasch’s most cynical piece of advice? Avoid paying off police officers, because “if you pay off a cop, they keep coming around every month, like flies, looking for a payoff.”
The Fallout: A Citywide Scandal
In 1978, the Chicago Sun-Times and the Better Government Association published a 25-part exposé detailing every shady deal, every bribe accepted, and every inspector caught on camera looking the other way. It was explosive. The series pulled back the curtain on a system so deeply entrenched in corruption that it was practically standard operating procedure.
The response was swift. Outraged citizens demanded change, and for once, change actually came. The federal government, the IRS, and the Illinois Department of Revenue all launched investigations.
Some key outcomes of the Mirage sting included:
The IRS sent 20 agents to investigate tax fraud in cash businesses.
The Illinois Department of Revenue created the Mirage Audit Unit, a new investigative body focused on tax evasion.
The city was forced to revise its code enforcement procedures and tighten oversight on inspections.
A federal investigation into the findings led to indictments of one-third of Chicago’s electrical inspectors in 1978, with more coming in later years.
Despite the undeniable impact of the investigation, the Chicago Sun-Times was controversially denied a Pulitzer Prize for the exposé. The Pulitzer board, led by Washington Post editor Ben Bradlee, refused to honour the series on the grounds that the journalists had used deception to obtain their evidence. While the decision remains a debated one, it did not diminish the impact of the investigation itself.
The Mirage’s Legacy
Though it started as a manufactured sting operation, the Mirage Tavern became something of a legend in Chicago journalism. Its impact was real, its findings damning, and its legacy lasting. Over time, the bar changed hands multiple times, undergoing renovations and rebranding efforts. Today, the building houses The Brehon Pub, a far cry from the grungy, corruption-ridden Mirage of the 1970s.
While the Sun-Times team might never have gotten their Pulitzer, their work remains one of the most audacious and effective pieces of investigative journalism in modern history. They set out to document corruption, and they did so in a way that made it impossible to ignore.
For Chicagoans of a certain generation, The Mirage Tavern isn’t just the name of a long-gone bar. It’s a reminder that, sometimes, the best way to catch a crook is to let them think they’re the one running the con.