"We are an ad-hoc group of 47th Ward residents -- homeowners, business owners, and renters -- who are sick of seeing Alderpuppet Schulter sell out our community to the highest bidders.


We want development without displacement.


We want Alderpuppet Schulter to come clean about his financial interests in neighborhood properties and about the developers who support his campaigns."


This is the message a number of residents of the northwest side 47th Ward have been sending to Alderman Eugene Schulter and other constituents, through a Web site (www.47ward.org) and also through a newsletter they distributed in May called "The Alderpuppet Purports," a spoof on a newsletter put out by Schulter called "The Alderman Reports."


On May 30 Schulter filed a $500,000 lawsuit charging libel, invasion of privacy and defamation because of the newsletter, with the named defendant being the Crossroads Fund, Inc., a 20-year-old Illinois non-profit corporation that gives grants to progressive community and activist organizations. In May Crossroads had given a $400 emergency grant to the group Community Organizing Works (COW) to publish the newsletter. The first hearing regarding the lawsuit is scheduled for Oct. 2.


"This is clearly an attack on his character," said Robert Fioretti, an attorney for Schulter. The alderman referred all questions to Fioretti. "He's had 27 years of public service with an unblemished record. Now he's being accused in a so-called community paper of taking bribes and being a racist."


Jeanne Kracher, executive director of Crossroads, said she thinks the suit is an effort to silence criticism of a public official.


"It seems odd to us that the alderman would file suit against Crossroads when it is clear that we weren't the ones who produced the paper," she said. "It was produced anonymously. I can only imagine this is about trying to silence criticism."


Leaders of other non-profit groups, including Donors Forum CEO Valerie Lies, said suing the funder for the actions of one of its grantees is an unprecedented move which could have a "chilling effect" on the future of funding for community groups all over the state.


"Foundations have never been sued for the actions of their grantees," said Lies. "This can be very intimidating. I'm afraid foundations would stop funding those very important community organizations that get involved in social justice and political debate, which are so important to a democracy."


Kracher said she "doesn't know what ripple effects this will have on the funding community," but she said Crossroads would not be influenced by the suit in its funding choices.


"We have been doing this work for 20 years and we are committed to it," she said. "Community groups are often at odds with the powers that be."


The newsletter contains inflammatory statements, according to the lawsuit, including:


"Nothing happens without the Alderpuppet signing on the dotted line, shaking a hand, taking a bribe or giving the age-old nod."


"Be a chump no more! Here are some tips on dealing with the lying Alderpuppet."


"Redeem this coupon at the Aldercrook's office for 30 miraculous minutes of his attention."


The suit notes that the letter was distributed at "legitimate newspaper distribution sites, giving it the impression of a legitimate newspaper."


Fioretti said the 1999 case of Keith Van Horne vs. Matthew "Mancow" Mueller, in which the shock disc jockey was sued for his comments about the football player, sets a precedent for the case.


"In Mancow, the Supreme Court ruled that anyone involved in spreading the libel is responsible," he said.


Fioretti added that, "Obviously we're all taking this very seriously."


The residents who published the letter have not publicly revealed their identity.


"The people who published this story are basically cowards," Fioretti said. "They didn't put their names anywhere. But once we find out who did this, they will be included in the suit."


In a press release, Schulter stated that: "I have no problem with legitimate dialogue, fair criticism and humorous commentary, but this impugns, misstates and distorts my history of service in my official duties as alderman."


The Web site explains that the attacks on Schulter are a response to what residents describe as the problem of gentrification and lack of political accountability in the neighborhood. Gentrification has been a contentious issue in Lincoln Square, which has typically been home to many Latino and Eastern European immigrants as well as low-income artists. Last spring, Schulter offered a $5,000 reward for information leading to the arrest of the person who was spray-painting anti-"yuppie" slogans on buildings in Lincoln Square.


"The paper was created in response to recent dramatic losses in affordable housing, rental units, low cost business space, and neighbors, all as a result of development that Schulter has helped to bring about directly - through zoning changes - and indirectly - through claiming a lack of power over development initiatives in the ward," the web site says. "We will not be chilled, squelched, squashed, or stopped. We are constituents of this ward and our representative has to deal with the fact that we don't agree with his policies. It's unfortunate that he feels the need to move a public debate into the private arena of a lawsuit."

www.47ward.org