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CBS 2 Political Editor Mike Flannery and Chief Correspondent Jay Levine contributed to this report.
CHICAGO (CBS) ― Federal authorities Thursday indicted Al Sanchez, a former top aide to Mayor Daley, according to the U.S. Attorney's office.

Sanchez, a key leader of the Hispanic Democratic Organization, was the mayor's Streets & Sanitation Department commissioner from 1999 until 2005.

According to a press release from the U.S. Attorney's office, Sanchez, a principal organizer for the politcally powerful HDO, was charged with engaging in a systematic fraud scheme to provide city jobs, promotions and other employment benefits to induce and reward political campaign work.

A second defendant, Aaron Del Valle, who assisted Sanchez in coordinating HDO activities and who received immunity from prosecution relating to this investigation, was charged with perjury for allegedly lying to the federal grand jury about his HDO activities, according to the release

"Fraud. They cheated. You're supposed to go in and have an honest system where people have an equal right to jobs, and if people behind the scenes are robbing the system of its honesty by saying we're going to take care of certain people and we're going to do it for a reason that has been barred… and then when people ask about it we're going to fill out certain forms and lie about it, that's fraud," said U.S. Attorney Patrick Fitzgerald.

Sanchez, 59, of Chicago, was charged with nine counts of mail fraud, and Del Valle, 34, of Chicago, was charged with one count of perjury in a 10-count indictment returned today by a federal grand jury. Both defendants will be arraigned at a later date in U.S. District Court.

There was no explicit reference to the mayor in the indictment of Sanchez and his former driver, Del Valle, now a Chicago police officer on leave of absence.

According to the federal indictment, Sanchez, while head of Streets and San, engaged in a systematic effort to provide city jobs, promotions, and other employment benefits, in order to induce and reward campaign work to benefit HDO and other private political organizations.

In a statement released Thursday afternoon, Mayor Daley said: "Naturally, I'm disappointed to hear about this indictment. It will be up to the courts to determine whether they violated the public trust. I have known Al Sanchez for several years and know him only to be hardworking and dedicated.

"The alleged offenses took place before we instituted major reforms in our hiring processes. Over the last two years, we have made a number of reforms.''

When Sanchez first came under scrutiny by federal investigators, the Mayor defended him even more strongly.

"He's very good. He's honest, hardworking; he's done a tremendous job. He's gonna be interviewed, give them all the facts. He's got nothing to hide," Daley said at that time.

"Mr. Sanchez was charged with breaching the duty of honest services by rigging jobs for people who did political work and also arranging jobs for people who performed personal services for him," Fitzgerald said.

Streets and San is a sensitive post. Snow storms topple mayors, and by all measures, Sanchez did a good job. But he was also a prolific political organizer with the HDO.

Longtime HDO critic Frank Avila said Thursday the indictment does not surprise him at all.

"A blind man – Ray Charles – could have saw these coming. Now how could Mayor Daley have said Al was a good guy and did a good job, everything's fine, we didn't know anything about it?" Avila said. "The evidence was overwhelming."

Curiously, prosecutors paint a very different picture of City Hall hiring in this indictment than they offered at the trial of Robert Sorich. They previously claimed that Sorich and his co-defendants could run roughshod over Sanchez and Streets and Sanitation. Now, they're saying virtually the opposite.

The investigation of fraudulent city hiring and promotion practices stems from the federal investigation of corruption in the city's Hired Truck Program. Sanchez and Del Valle are the 47th and 48th defendants, including more than 20 current or former city employees, who have been charged since January 2004. Forty-four defendants have been convicted, one is deceased, and the remainder are pending.

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