Showing posts with label Investigations. Show all posts
Showing posts with label Investigations. Show all posts

Tuesday, November 19, 2013

JPMorgan Chase to pay Illinois pension systems $100 million under federal settlement

By Jamey Dunn

As part of a $13 billion national settlement, JPMorgan Chase & Co. has agreed to pay millions to Illinois’ public employee pensions systems for not disclosing the risks associated with some investments.

As part of the settlement, JPMorgan Chase admitted that it the misrepresented the quality of mortgage-backed investments it sold. “Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” Attorney General Eric Holder said in a prepared statement. “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior. The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability.”

Under the deal, the bank will pay $100 million to Illinois pension systems that purchased the investments prior to 2009. “We are still cleaning up the mess that Wall Street made with its reckless investment schemes and fraudulent conduct,” Attorney General Lisa Madigan said in a written statement. “Today’s settlement with Chase will assist Illinois to recover its losses from the dangerous and deceptive securities that put our economy on the path to destruction.” Madigan has been working with President Barack Obama’s Financial Fraud Enforcement Task Force. The group’s investigations spurred this and other settlements from big banks and mortgage servicers. According to a news release from Madigan, JPMorgan Chase will pay $72.4 million to the Illinois Teachers Retirement System (TRS), $16.2 million to the State Universities Retirement System (SURS) and $11.4 million to the Illinois State Board of Investment, which oversees the State Employees’ Retirement System (SRS), General Assembly Retirement System and Judges’ Retirement System (GARS).

The settlement is the largest in U.S. history. It also includes a $4 billion settlement with the Federal Housing Finance Agency and a $4 billion for the U.S. Department of Housing and Urban Development. Some of that money will go toward loans the bank is forgiving or giving more favorable terms to borrowers. Some will go to new low-interest loans to borrowers in areas hit hardest by the housing crisis. The funds will also be used to tear down long-abandoned homes.

JPMorgan Chairman and CEO Jamie Dimon said in a prepared statement: “Today’s settlement covers a very significant portion of legacy mortgage-backed securities-related issues for JPMorgan Chase, as well as Bear Stearns and Washington Mutual.” The company recently announced it has set aside $23 billion to pay for potential settlements.

Justice Department officials say that the settlement does not absolve JPMorgan employees from future civil or criminal charges. “The agreement does not release individuals from civil charges, nor does it release JPMorgan or any individuals from potential criminal prosecution. In addition, as part of the settlement, JPMorgan has pledged to fully cooperate in investigations related to the conduct covered by the agreement,” a statement from the department said.

Tuesday, October 20, 2009

Operation Board Games gets another witness

By Bethany Jaeger
Alonzo “Lon” Monk is cooperating in the ongoing investigation into extensive political corruption in former Gov. Rod Blagojevich’s office and political campaign. Monk pleaded guilty Tuesday morning to one count of wire fraud.

That’s just one of 19 counts leveled on participants in “Blagojevich Enterprise," which the feds allege primarily existed to “exercise and preserve power over Illinois government for the financial and political benefit of Blagojevich,” as well as his family members and friends. According to Monk’s plea, he received about seven to nine payments of $10,000 from Tony Rezko as “a gift, not a loan.” Monk joins list of witnesses in the governor’s June 2010 trial, so far including:
  • John Harris, another former chief of staff who in July pleaded guilty to tax fraud.
  • Rezko, who pleaded guilty in June 2008 and already is serving a prison sentence.
  • **The late Christopher Kelly, who would have been a key witness, apparently committed suicide days after pleading guilty to other charges in September.
Monk’s plea agreement is here.

Monk, of Park Ridge, was Blagojevich’s former law school roommate, his general counsel when in Congress, his first chief of staff when he became governor in 2003, his campaign manager in his 2002 and 2006 gubernatorial bids and, most recently, a lobbyist. One of Monk's clients included a horse racetrack owner, reportedly John Johnston.

Monk’s guilty plea pertains to a scheme in November to December 2008 to pressure Johnston to raise $100,000 for Blagojevich’s political campaign (see Count 11 of the April indictment).

Part of the scheme allegedly was caught on secret FBI recordings. One brief conversation, according to the federal transcripts, was between Monk and Johnston about supporting Blagojevich’s campaign in return for the governor’s signature on a bill to subsidize the horse racing industry. The recording was played during Blagojevich’s impeachment trial in the Senate last January.

Monk, who was a lobbyist at the time of the recordings, was heard in another cell phone conversation with Blagojevich, telling the governor to call Johnston directly. “It’s better if you do it just from a pressure point of view,” Monk was heard saying to Blagojevich.

The scheme allegedly was under time constraints, as Blagojevich wanted the money before the end of the year, when a new state law — the so-called pay-to-play ban — would ban him from collecting political donations from contractors who do significant amounts of business with the state.

Monk’s plea also confirms conversations and actions taken to enrich themselves and Blagojevich’s campaign fund. For instance, before Blagojevich became governor in 2002, the plea says, Monk planned with Blagojevich, Rezko and Kelly to use the governor’s office and Monk’s chief of staff office for financial gain, dividing the proceeds among them. One scheme allegedly included a 2003 pension deal that refinanced $10 billion in pension obligation bonds, issuing all $10 billion at once so a particular investment firm would benefit and donate more money to the governor’s campaign. It also allegedly included pressuring engineering firms to contribute to Blagojevich’s campaign in return for state capital projects and pressuring Children’s Memorial Hospital in Chicago for a contribution in exchange for a state grant, according to the plea.

The feds also say that once convicted felon Stuart Levine had been confronted by the FBI in 2004 for rigging various state boards, the focus shifted to making money through Rezko’s real estate development, involving Blagojevich’s wife, Patricia, in marketing efforts.

One count of wire fraud carries a maximum prison sentence of 20 years and a fine of $250,000, although Monk’s plea agreement recommends a sentence between two and four years.

Blagojevich’s trial is scheduled to start June 2, 2010.

Tuesday, September 08, 2009

Chris Kelly pleads guilty to O'Hare scheme - UPDATED UPON HIS DEATH

By Bethany Jaeger
Christopher Kelly, a close adviser and fundraiser for former Gov. Rod Blagojevich, died Saturday, September 12, just days before he was to report to federal prison to serve at least eight years for two of three criminal cases against him. He was 51.

Law enforcement officials reportedly were looking into a drug overdose.

Kelly would have been a key figure in the ongoing corruption trial of Blagojevich, scheduled to go to court in June 2010. Kelly was indicted as part of “Blagojevich Enterprise,” an extensive scheme that allegedly began in 2002 to use the governor’s office for private and political gain, including auctioning off the U.S. Senate seat once held by President Barack Obama. Kelly was indicted along with the former governor; his brother, Robert Blagojevich; former campaign manager and lobbyist Alonzo Monk; Springfield lobbyist William Cellini; and former chief of staff John Harris. Kelly pleaded not guilty to those charges.

Shortly before his death, however, he pleaded guilty today to two counts of mail fraud in one of three federal indictments against him. But it's unknown whether he was cooperating in the ex-governor's ongoing corruption trial.

Read his plea agreement here. The Burr Ridge resident UPDATED: was supposed to report to jail September 18 and agreed to forfeit $450,000 for a scheme of rigging roofing contracts with two major airlines and using illegal kickbacks for personal use. On top of a three-year prison sentence for a separate tax fraud case, his plea Tuesday calls for a nearly five-year sentence.

Kelly pleaded guilty to rigging bids to steer $8.5 million in inflated contracts for roofing work done on American Airlines and United Airline facilities at O’Hare International Airport between 1998 and 2006. The scheme benefited BCI Commercial Roofing Inc. in Markham, of which he is president and owner.

About $1 million of the kickbacks went to repay gambling debts and a home loan, according to the plea. Some of the kickbacks also went to entities associated with Tony Rezko.

Kelly originally was charged with 11 counts of mail fraud and six counts of money laundering for the scheme.

Friday, July 10, 2009

Burris: No longer in the running

By Bethany Jaeger
No Lisa Madigan. No Roland Burris. The race to be the next U.S. senator from Illinois just narrowed to a more classic competition. The seat has gained national attention for its previous occupant, President Barack Obama.

Madigan, the Illinois attorney general, announced yesterday and Burris announced today that they opted not run in 2010.

“It’s an open seat, and the focus is more going to be more on national issues than would have been the case if Burris were running or if Lisa Madigan essentially would have cleared the field,” said Kent Redfield, political scientist at the University of Illinois at Springfield.

If Madigan would have run, Redfield said she would have been the Democrats’ strongest candidate. “Her not running is a minus for the Democrats, but Burris not running is certainly a plus. There’s no question about that.”

Burris never shed the cloud that hovered over his appointment by former Gov. Rod Blagojevich. The then-governor had just been arrested on federal corruption charges, accused of trying to personally profit from his powers to appoint the state’s next senator. Early polling of 644 likely voters showed that just 5.3 percent of respondents supported Burris as a candidate for a full term. Numerous Illinois officials, including U.S. Sen. Dick Durbin and then-Lt. Gov. Pat Quinn, urged Burris step down. Burris wouldn’t budge. His ambitious style came through in, "Always in the running," our profile of him in Illinois Issues magazine.

Burris said today during a Chicago news conference that fundraising had a lot to do with his decision not to run in 2010. Here’s an excerpt of his announcement:

Life is about choices. Make no mistake, I love serving in the United States Senate. I love serving the people of Illinois, make no mistake.

I’m the only African-American serving in the Senate, and I believe that diversity and representation of all segments of our society is essential to who we are as a nation.

The reality of being a U.S. senator today [is that it] requires not only a significant time commitment to performing the job, but an almost equal commitment to raising funds to run competitively for the office.

Political races have become far too expensive in this country.

I was called to choose between spending my time raising funds or spending my time raising issues for my state. The people … should always come first.

The chronicles of Burris’ statements about whether he spoke to Blagojevich, Blagojevich’s brother or Blagojevich’s inner circle was the never-ending story. First he testified to an Illinois House committee that was investigating cause for the governor's impeachment. He said he only spoke with Lon Monk, Blagojevich’s former chief of staff. Then Burris revealed in a follow-up affidavit that he also spoke with the governor’s brother, as well as three insiders: Doug Scofield, John Wyma and former Deputy Gov. John Harris, who just pleaded guilty to wire fraud in the ongoing Blagojevich corruption case.

Burris most recently avoided perjury charges in Sangamon County, where State’s Attorney John Schmidt said Burris’s statements might have been vague, but there’s no proof that he intentionally mislead the Illinois House committee. Burris still faces a probe by the U.S. Senate.

His bow out of the 2010 election eliminated an easy target for the GOP, Redfield said. “It kind of takes Burris and Blagojevich out of the Senate race.”

Now, likely candidates are taking shape. On the Democratic side, they include state Treasurer Alexi Giannoulias. Redfield says he has the advantage of being the only candidate so far who has run a statewide race before. He also has a significant campaign kitty, with reportedly more than $1 million raised for his potential Senate bid. Two candidates with less name recognition include Cheryle Jackson, chief executive officer of the Chicago Urban League, and Chris Kennedy, head of Chicago’s Merchandise Mart and son of the late U.S. Sen. Robert F. Kennedy. Redfield said Jackson also could have a slight disadvantage by being tied to Blagojevich. She was his communications director during his first term.

On the Republican side, U.S. Rep. Mark Kirk of Hinsdale has been reported as set to run for the Senate seat. Redfield said he brings his national experience to the table, but as a moderate Republican, he would have to work to gain the moderate and independent vote. Andy McKenna, chairman of the Illinois Republican Party and businessman, also has reportedly discussed the idea. He lost his 2006 bid.

Tuesday, April 28, 2009

Pass of the torch

By Bethany Jaeger
Gov. Pat Quinn’s Illinois Reform Commission issued its final recommendations for reforming Illinois government, passing the torch to the state legislators to act before their scheduled May 31 adjournment. While some reform measures appear slated for widespread agreement and enactment, other provisions are more controversial and expected to take a lot more time to negotiate.

Quinn said today that if the legislature fails to act, he might resort to grassroots citizen action to place major reforms on the 2010 ballot. But the state Constitution may limit his power to change anything beyond legislative procedures. (See our next blog, “If the flame is extinguished.”)

Commission chairman Patrick Collins, a former assistant U.S. attorney, said for legislators or opponents who say the commission’s recommendations equal “pie-in-the-sky” ideas, every proposal has been tried in other states or jurisdictions. “It is no excuse to say that these can’t be done because they have been done,” he said.

Commissioner David Hoffman, inspector general for the City of Chicago, said anything short of comprehensive and bold reforms would foster more of the same. “In general, our standard is that reform should not be piecemeal, it should not be tinkering, it should not be minor.”

While commissioners are open to discussing changes with legislators, Hoffman said the commission’s final report is the measuring stick for meaningful change. (See highlights of the commission’s recommendations here.)

A few of the recommendations are new concepts for this legislature to consider, meaning lawmakers will have to build to a new comfort level before acting, said David Morrison, deputy director of the Illinois Campaign for Political Reform in Chicago. That comfort level might not come until proposals are spelled out in new legislation. “It’s not enough to describe the cake. You have to give the recipe, too,” he said.

Even for the controversial proposals, Morrison said he’s encouraged by the commission’s thorough report (the appendices alone take up 152 pages), which resulted from active engagement from people throughout the state. The commission’s effort also couples with the legislature’s special joint government reform committee. “There’s real intentional, deliberate action that may come out of this,” Morrison said.

Commissioner Brad McMillan, executive director of the Institute for Principled Leadership in Public Service at Bradley University in Peoria, spoke directly to the cynics during a Statehouse news conference this morning: “We have a new governor. We have new leadership in Springfield. We have a rare moment in time where the public believes that public corruption and ethics reform is the No. 1 issue in this state. We are hoping that this convergence will mean real, meaningful reform gets passed this legislative session.”

Law enforcement
Something new for legislators to consider is the commission’s concern that state law hamstrings state-level investigators. In turn, Illinois tends to rely on federal prosecutors to go after such public corruption cases as former Gov. George Ryan, political insider Tony Rezko and, now, former Gov. Rod Blagojevich, among many others. According to the report, prosecutors in most other states have powers and resources similar to those of federal investigators. Not Illinois. The commission said this state is only one of four that prevents states investigators from recording conversations with consent of one of the parties.

Also, the Illinois attorney general can convene a statewide grand jury to investigate some crimes but not cases of public corruption. That contrasts with Pennsylvania and most other states, according to the report.

Morrison said the idea of strengthening the powers of state prosecutors was one of the “most inspiring” recommendations. “We plainly cannot rely on federal law enforcement to police Illinois politics,” he said. “We need something that’s going to move faster than that.” It took prosecutors more than seven years to prosecute and convict Ryan.

Legislative reaction
Legislators are expected to debate some of the proposals soon, but Rep. Lou Lang of Skokie said the commission’s recommendations are “not necessarily the Holy Grail.”

“Just because the Collins commission says jump, it’s not our responsibility to say, ‘How high?’” he said.

Senate Minority Leader Christine Radogno said areas ripe for change include those where Illinois lags behind other states. She said some issues, including beefing up the Freedom of Information Act or cleaning up state contracting practices, could move quickly. Others, including campaign contribution limits, could take longer. “Some of the things we’ve already kind of vetted, and now we need to act,” she said. “Others we need to vet for the first time.”

Limiting the length of time state legislative leaders can serve in the top positions, for instance, hasn’t been debated. And it’s unlikely to find traction any time soon.

Limiting the amount individuals and political committees can donate to politicians has been debated, but it’s far from a consensus. Democratic Sen. Susan Garrett of Lake Forest said however controversial, she expects campaign contribution limits to get to the Senate floor for debate. “Absolutely, yes. I can’t imagine there not being a vote. I think every independent commission that is testifying across the state and hearing from different elected officials, the trend is, yes, Illinois needs to have caps on contributions.”

The amount of the cap is at least one sticking point. “We may be voting for two or three different caps,” Garrett added.

On the other hand, procurement, or the way the state contracts with service providers, is one area where widespread agreement could expedite reforms. But legislators are unlikely to go as far as recommended by the Illinois Reform Commission, which suggests pulling out all chief procurement officers and putting them into a new, independent state agency. Procurement officers expressed concerns last week about whether new rules would slow down an already cumbersome process.

Rep. Renee Kosel, a New Lenox Republican, said: “I think it is essential that we do all of it. Otherwise, you’re just going to leave ways to go around it.”

Tuesday, April 14, 2009

Blagojevich pleads not guilty

By Hilary Russell

The last time he entered the building, he wore a running suit. This time, former Gov. Rod Blagojevich wore a suit and tie and maintained his innocence against the 16 criminal counts he was charged with in an April 2 indictment.

“His public persona is very consistent, and whether that’s based in confidence or delusion, I have no idea,” said Kent Redfield, a political science professor at the University of Illinois at Springfield. “But certainly he doesn’t act like someone who clearly is in jeopardy of spending a large chunk of the rest of his life in jail if he were to be convicted of all of the charges against him.”

U.S. District Judge James Zagel presided over the arraignment at the Dirksen U.S. Courthouse in downtown Chicago.

Blagojevich pleaded not guilty to all counts and was represented by defense attorney Sheldon Sorosky. According to the Associated Press, Sorosky requested the prosecutor’s permission to use money from one of Blagojevich’s campaign funds, Friends of Blagojevich, to help pay for additional attorneys to represent Blagojevich. Sorosky reportedly stated his concern that it will take more than one attorney to give his client fair representation.

But if Blagojevich were convicted, the Associated Press reported that prosecutors said they would ask the judge to forfeit the campaign money, which would mean that any attorney representing Blagojevich could be forced to return payments received from the campaign fund.

Redfield said that if money became an issue, that could spell trouble for Blagojevich. “The [former] governor faces a real possibility that he is not gonna have the strongest counsel as he would want because this is a very complex trial. There is a ton of discovery involving all those tapes and the defendants. It’s a very complex case, and it’s not clear where he would get the resources to hire a top-notch legal team to defend himself.”

Blagojevich lost his first legal team just prior to the Senate trial in which he was impeached and thrown out of office. Edward Genson, Sam Adam and Adam's son by the same name, cited different reasons for recusing themselves from the case.

Robert Blagojevich, the former governor’s older brother, also appeared at the arraignment today and was represented by Michael Ettinger. Robert Blagojevich was hired by his brother to act as campaign manager after prosecutors began investigating Christopher Kelly, who initially headed the former governor’s campaign fund.

In a statement released by the former governor’s public relations agency, Blagojevich said: “Now we can begin the process of getting the truth out, and I can clear my name and vindicate myself. I have not let down my family or the people of Illinois. I am innocent of every single allegation."

During an appearance with President Barack Obama’s Education Secretary Arne Duncan in Chicago, Gov. Pat Quinn said the only way to clean up state government is by making major changes.

“We have to take the indictment and dissect and identify every part of state government that was put in jeopardy,” Quinn said (download audio file here). “These are allegations, of course, but I think there’s still fire bells going off in the night to alert the people of Illinois and to the governor of Illinois that reform is indispensable.”

Kelly, a former Blagojevich aide, and John Harris, Blagojevich’s former chief of staff, and Springfield businessman William Cellini are scheduled to be arraigned Thursday. Alonzo “Lon” Monk, Blagojevich’s former campaign manager and chief of staff, is scheduled to be in court next week. Harris and Monk are reportedly cooperating with investigators.

Thursday, April 02, 2009

Prosecutors target “Blagojevich Enterprise” - UPDATED

By Bethany Jaeger, with Hilary Russell and Jamey Dunn contributing
Today’s 75-page federal indictment of former Gov. Rod Blagojevich and five members of his inner circle details an extensive and long-term scheme that allegedly began in 2002, before Blagojevich took his oath of office in January 2003.

U.S. Attorney Patrick Fitzgerald’s office is now going after what’s described as the “Blagojevich Enterprise,” which includes the office of the governor and Blagojevich’s campaign fund, Friends of Blagojevich. The entity, the feds allege, primarily existed to “exercise and preserve power over Illinois government for the financial and political benefit of Blagojevich,” as well as his family members and friends.

Read the U.S. attorney's press release here. A fact sheet is here. More context and online sources of how we got here at Illinois Issues magazine.

Blagojevich and his associates allegedly conducted a pattern of dishonest behavior designed to enrich themselves, which would violate the federal Racketeer Influenced and Corrupt Organizations Act, or RICO, according to Andrew Leipold, a law professor with the University of Illinois’ Institute of Government and Public Affairs.

Blagojevich is charged with 16 counts of federal corruption, including racketeering conspiracy, wire fraud, extortion conspiracy and attempted extortion. They each carry a maximum sentence of 20 years in prison and a $250,000 fine. He also allegedly lied to the FBI, a crime carrying a maximum five-year prison sentence and another $250,000 fine. In addition to the allegations already documented in the criminal affidavit filed with his arrest Dec. 9, 2008, today’s indictment includes new details and allegations.

Who
The indictment reads less like alphabet soup because federal prosecutors in the Northern District of Illinois have identified and, in some cases, convicted individuals as part of the ongoing probe called Operation Board Games. Joining Blagojevich in the indictment include five others:
  • His brother, Rob Blagojevich of Nashville, Tenn., who chaired his campaign fund since August 2008.
  • John Harris of Chicago, Blagojevich’s chief of staff from late 2005 until last December, when he was arrested with Blagojevich.
  • Alonzo “Lon” Monk of Park Ridge, a lobbyist and longtime Blagojevich insider and campaign manager, as well as Blagojevich’s first chief of staff upon becoming governor in 2003.
  • Christopher Kelly of Burr Ridge, a Blagojevich fundraiser and previous chair of Blagojevich’s campaign fund.
  • William “Bill” Cellini of Springfield, director of the Illinois Asphalt Pavement Association, who raised money for Blagojevich and allegedly influenced officials of the Teachers’ Retirement System. He also was associated with Commonwealth Realty Advisors, a real estate management firm that invested hundreds of millions of dollars on behalf of TRS. He was indicted in October 2008 for “allegedly conspiring with others to obtain campaign funds for Blagojevich by shaking down an investment firm seeking a $220 million allocation from TRS.” This replaces that indictment.

What
Before Blagojevich even became governor, he, along with Monk, Kelly and Tony Rezko, allegedly started scheming to use the governor’s office for financial gain that would be split among them once Blagojevich left office. Blagojevich allegedly let Kelly and Rezko exercise significant influence over state government operations, and they, in turn, allegedly generated millions of dollars for Blagojevich’s campaign fund and “provided financial benefits directly to Blagojevich and his family.” For instance, one part of the scheme allegedly included Rezko's real estate business paying Patti Blagojevich, the then-governor's wife, $12,000 a month, as well as another $40,000 in commission, "even though she had done little or no work," according to the indictment.

The indictment also alleges that Blagojevich had control of his campaign fund at all times, even as the chairmen of the fund changed.

UPDATED: Some more highlights of the details:
  • Before Blagojevich became governor, he, along with Monk, Kelly and Rezko, allegedly started scheming to use the governor’s office for financial gain that would be split among them once Blagojevich left office.
  • Blagojevich, Monk, Kelly and Rezko allegedly agreed to use Blagojevich’s and Monk’s offices to divide financial gain among themselves, including the kickback from the Pension Obligation Bond refinancing in 2003.
  • The feds say Blagojevich lied to FBI agents on March16, 2005, when he said he kept state government and politics separate and didn't want to know who contributed money to his campaign.
  • From 2004 to 2006, Rezko allegedly gave Monk between $70,000 and $90,000.
  • Last year, Blagojevich allegedly directed Harris to find him a paid position at various state boards, and when that didn’t work, he directed Harris to connect his wife with financial institutions. When that failed, Blagojvich directed that those institutions to no longer get state business, according to the indictment.
The federal prosecutors are seeking the forfeiture of all funds and assets held at four banks in the name of Friends of Blagojevich, although the campaign fund is not a defendant. Fitzgerald's office also seeks $188,370 from Blagojevich as proceeds of the alleged scheme and racketeering activity. The indictment lists Blagojevich’s apartment and Chicago home as “substitute assets.”

Now what?
The indictment comes after more than a month of public hearings conducted by two panels, one appointed by Gov. Pat Quinn and one convened as a special joint legislative committee between the House and the Senate. Within two hours of the indictment being filed office tonight, one of the byproducts of the legislative committee passed both chambers.

The General Assembly approved SB 364, crafted with the leadership of House Speaker Michael Madigan and Senate President John Cullerton. It’s aimed at reforming the state’s public employee pension system and requiring all trustees to abide by state ethics laws. All trustees of the Teachers’ Retirement System, specifically, would be replaced. And the governor would be able to appoint more trustees to that board.

The Teachers’ Retirement System, which serves more than 355,500 teachers outside of Chicago, was one of the first state government operations revealed by the feds to be corrupted by Blagojevich’s inner circle, according to Fitzgerald’s office. System officials immediately released a statement of opposition, saying the governor’s ability to appoint more members has potential to increase, not decrease, the opportunity for political influence.

The board’s statement said the rationale behind the measure “erroneously accused the elected members of the board of failing to prevent a corruption scheme in 2004 hatched by a former gubernatorial appointee,” meaning Stuart Levine. “The elected trustees of the TRS Board are angry and deeply troubled by the implication that they were somehow complicit in the illegal behavior carried out by Stuart Levine,” said Bob Lyons, a board trustee twice-elected by annuitants of the Teachers’ Retirement System following Levine’s resignation, according to the statement.

Lyons also said that terminating Jon Bauman, executive director of the system, on July 1 would unfairly punish a man who hasn’t been accused of committing a crime.

Cullerton said the reforms are designed to prevent “what Stuart Levine got away with for so long” by requiring consultants to register, requiring all board members to follow the same ethics standards applied to legislators and executive branch employees to prevent conflicts of interest and so-called pay-to-play politics.

Cullerton also offered his personal reaction to the former governor’s indictment. “I think it’s a sad situation because he is the father of a couple of kids. He lives down the street from me, and it’s always sad when stuff like this happens. But, at the same time, I can’t imagine what this place would be like if he were still the governor trying to solve the problems that we have with the incredible deficits that we have.”

Legislators of both parties added that the indictment should serve as yet another wakeup call to enact meaningful reforms to strengthen rules for campaign finance, state procurement, public access to information and even the structure of government. Ultimately, however, reforms can only make it harder for people who are bent on mischief, Leipold said. “Surely oversight can help, sunshine can help, reporting can help, but nothing’s going to stop things like this completely.”

Many just want to move on from the embarrassment. “There’s plenty of blame to go around,” said Rep. Bill Black, a Danville Republican. “I don’t care about what has happened. Let's get involved and care about how we clean this up. I want my grandkids to be proud of me.”

At the least, federal prosecutors continue to send a message that “business as usual” won’t be tolerated. Sen. Matt Murphy, a Palatine Republican, said: “And the prosecutor is serious. People who want to play that game better learn real quick it’s a losing proposition.”

Tuesday, February 17, 2009

The never-ending story

By Jamey Dunn
House Speaker Michael Madigan sent documents today to the Sangamon County state’s attorney’s office that could prompt a perjury investigation of U.S. Sen. Roland Burris, and Burris on Monday revealed more information about his conversations with Rob Blagojevich, brother of the former governor.

Burris’ latest public perception battle began over the weekend, when it was revealed in a new affidavit that he discussed his interest in the U.S. Senate seat with members of former Gov. Rod Blagojevich’s inner circle. Illinois Republicans and Democratic Attorney General Lisa Madigan have called for Sangamon County State’s Attorney John Schmidt to investigate possible perjury charges based on inconsistencies between the most recent affidavit, filed earlier this month, and Burris’ affidavit and testimony that was given to the House committee a month ago.

Madigan today sent the two affidavits that Burris filed with the special House investigation committee and a transcript of his testimony to Schmidt’s office. House Minority Leader Tom Cross said that this was a “good start,” but he said he still wanted Democrats to explain why they did not disclose the affidavit as soon as it was filed February 4.

Rep. Jim Durkin, minority spokesman for the House committee, said that Democrats kept the GOP members out of the loop by refusing to reveal the new affidavit and by making the decision to send the documents to the state’s attorney’s office on their own. Durkin said Democrats have closed the door on bipartisanship and that he sees “no reason to talk to them about anything.”

Meanwhile, Burris continues to add details to his story. He reportedly said today that he reached out to the prosecutor and said he had nothing to hide. Also, according to the Chicago Tribune, he said he did, indeed, speak to the former governor’s brother and tried raise some money for the governor’s political campaign. As outlined in the affidavit, there were three conversations. Burris shed some more light on them today, per the Tribune transcript:
  1. October 2008: Burris said Rob Blagojevich called him to seek fundraising help for the former governor, and Burris said he couldn’t help until after the election. According to Burris, during that phone call, he also inquired about the Senate seat. Rob Blagojevich’s lawyer has been quoted as saying otherwise. According to Burris’ affidavit, Rob Blagojevich said Burris’ name had come up.
  2. After the November election, Rob Blagojevich called again. Burris said he tried to organize fundraising, but no one he approached was interested in donating. Burris said they discussed the possibility of approaching other people to raise money.
  3. The third time that Rob Blagojevich called, Burris said he explained that he could no longer help because he was interested in the appointment. Burris previously said that he did not offer any fundraising help.

Kent Redfield, a political scientist at the University of Illinois at Springfield, said there probably was no quid pro quo involved in the U.S. Senate appointment. Redfield said that Burris’ one chance to clear up any suspicion about his appointment and “sever ties” with the former governor was in January. And the more details that come out now, the more “everything is under suspicion.”

In addition, Redfield said, the more details that trickle out, the more Burris’ chances in the 2010 U.S. Senate race are called into question. Burris’ actions also increase the chances that state Treasurer Alexi Giannoulias, who currently is traveling abroad with U.S. Sen. Dick Durbin, will make a run for the seat. Redfield also said that if Burris decided to run and won the Democratic primary, these revelations would become fodder for a Republican challenger’s campaign. “The TV commercials almost write themselves,” he said.

Thursday, February 05, 2009

Chris Kelly indicted again

Christopher Kelly, a former campaign manager to former Gov. Rod Blagojevich, received another federal indictment today, this time alleging he rigged roofing contracts with two major airlines to pay for gambling debts and a house, among other things.

We wrote about him a little more than a year ago, when his first indictment said he used corporate funds from his roofing and consulting firms to pay illegal gambling debt and bookies.

The most recent indictment says he allegedly funneled more than $1.18 million in proceeds from fraudulent contracts (see U.S. Attorney Patrick Fitzgerald's news release here). He’s the president and owner of a roofing firm, which allegedly rigged bids to steer $8.5 million in “inflated contracts” for roofing work done on American Airlines and United Airlines facilities at O’Hare International Airport. The scheme allegedly helped Kelly pay $383,000 in personal gambling debts, $700,000 for a personal loan to buy a house and $40,000 in personal expenses. The scheme also granted $450,000 to a president of the consulting firm allegedly involved in the activities.

Kelly was charged with 11 counts of mail fraud and six counts of money laundering. Each count carries a maximum penalty of 20 years in prison and a $250,000 fine. The feds also are seeking the $1.18 million involved in the money laundering counts, $1.6 million involved in the contract fraud, as well as Kelly’s Burr Ridge house. He’ll be arraigned at a later date.

Friday, January 23, 2009

The cowboy way

Jamey Dunn contributed to this post.

Gov. Rod Blagojevich today compared himself, among other things, to a cowboy facing a hanging before getting a fair trial. He used a rather dizzying metaphor to illustrate his series of accusations that the Illinois Senate impeachment trial set to begin Monday is a “sham” and a foregone conclusion.

He’s making a not guilty plea through the media rather than through the impeachment trial. It began with an exclusive interview on live Chicago radio this morning, followed by a Chicago news conference this afternoon. Throughout both events, he never denied that it was his voice on the FBI recordings that were obtained as part of the ongoing criminal investigation. Nor did he deny that he actually said those things transcribed in the 76-page criminal complaint, swear words and all. On WLS-AM radio’s Don and Roma show this morning, he apologized for the profanity. “But had I known they were listening, I wouldn’t have used those words.”

In both the radio interview and the news conference, he presented a conspiracy theory, of sorts, for why the state legislature is diligently working toward removing him from office: “They want to get me out fast so they can put a huge income tax increase on the people of Illinois, an income tax increase that I fought for six years,” he said. Referring to a proposal to increase the sales tax on motor fuel, he said, “If I’m out of the way, they can quietly push this through, and the people of Illinois are going to see their taxes go up during an economic depression.”

He said everything he has done as governor — including expanding health care to middle-class families, offering free mass transit rides for seniors, allowing women to get free pap smears and mammograms and increasing the minimum wage twice — was done in the best interest of the people and was "not that inconsistent with the way the process works.”

He also said the Senate trial rules deny the presumption of innocence and are choking his ability to tell the truth. He specifically blames two Senate rules, which he says prevent him from calling witnesses and from challenging the charges. He said he wants to call President Barack Obama's chief of staff, Rahm Emanuel, as well as Obama administrator Valerie Jarrett, and U.S. Rep. Jesse Jackson Jr., who Blagojevich said would verify proper conversations about appointing a replacement to Obama's U.S. Senate seat. And Blagojevich would call U.S. Sens. John Kerry and John McCain, as well as governors from Kansas and Wisconsin, who Blagojevich said helped in the effort to import prescription drugs from Canada for seniors.

“Just let me bring my witnesses in to show people and to have them under oath testify before the Senate that I have not done anything wrong and I’ve done mostly things right. And if they just give me a chance to bring witnesses, I’ll be there first thing Monday morning. It’s just that simple.”

The rules, however, are clear that his defense team could have called witnesses if they would have participated in the trial, which they don't plan to do. They missed the deadline to subpoena witnesses. Here’s that rule:
Rule 15(f)
It is never in order to request a subpoena for the testimony of any person or for the production of documents or other materials from that person if the U.S. Attorney for the Northern District of Illinois has indicated that the person’s testimony, or inquiry into the subject matter of that person’s testimony, could compromise the U.S. Attorney’s criminal investigation of Rod R. Blagojevich, as exemplified by, but not limited to, exhibits 10, 24, and 30 of the House impeachment record, unless the U.S. Attorney subsequently indicates otherwise.

CLARIFICATION: He’s [somewhat] right that the rules do prevent him from challenging the charges detailed in the report recommending impeachment, as approved by the full House. But he could have filed a response to the charges, and he could have filed a motion to dismiss them. Neither he nor his lawyers did that by the deadlines. So he missed his chance to challenge the charges. Here’s that rule:
Rule 8(b)
The House Prosecutor or the Governor or his counsel may object to the admission or exclusion of evidence. Any objection must be addressed to the Chief Justice. No objection, however, may be made against all or any part of the House impeachment record filed by the House Prosecutor with the Secretary.

“In short, you can have all the witnesses you want,” Blagojevich said in the afternoon news conference. “It doesn’t matter because that document alone is going to be accepted as fact.”

Sen. Kirk Dillard, a Hinsdale Republican, said the governor’s interpretations of the rules are “flat out wrong.” In a phone conversation yesterday, Dillard said: “We have certainly gone overboard to protect his due process rights, and, the rules are essentially copied from the federal system, which acquitted or did not impeach Bill Clinton. So under the same set of standards and guidelines, President Clinton walked.”

Kent Redfield, political scientist at the University of Illinois at Springfield, said Clinton probably was guilty of some minor felonies but that he had strong political and public support, so the Senate would not convict. Blagojevich could be trying to do something similar, he said, appealing to Illinois citizens to apply pressure on the senators.

Redfield doesn’t buy it.

“He seems to be pretty removed from reality at this point,” he said. “We’re past the point that he can rally public opinion.”

Blagojevich throughout the day repeatedly cited historical figures — including Richard Nixon and Teddy Roosevelt. He also said he was in a modern-day Frank Capra movie such as Mr. Smith Goes to Washington, where the good guy fights the establishment and gets accosted for breaking the rules but continues to fight for the people. “The only difference is some of the language is that you wouldn’t hear in the 1930s,” Blagojevich said.

Redfield says the governor is playing out the same act over and over again. “The frightening thing about that performance is that he seems to be completely sincere.”

Blagojevich did have a sentimental moment on the Don and Roma show this morning. He said he’s determined to clear his name and his reputation for the sake of his daughters, which he said is why he wouldn’t resign. “To simply cut and run is to simply say that I did something wrong, and then my little girls are going to grow up thinking somehow their dad did something wrong when I didn’t. That, I’ll never ever sacrifice.”

Friday, January 02, 2009

Impeachment accelerating in 2009 - UPDATED

The impeachment process aimed at Gov. Rod Blagojevich is accelerating and could be considered by the full Illinois House as soon as next week. House Speaker Michael Madigan told his members to be prepared to be in session for seven consecutive days, starting January 7 and running into the inauguration of a new General Assembly January 14.

At the same time, a special committee in the Senate is meeting in Chicago next week to set procedures for an impeachment trial in that chamber. A full trial would start if a majority of House members voted in support of impeachment articles.

Things picked up after Blagojevich’s appointment of Roland Burris to fill the U.S. Senate seat vacated by President-elect Barack Obama. The empty seat has been at the forefront of international news following the release of a criminal complaint against the governor, who allegedly tried to reserve the appointment for someone who would “pay to play.”

The Illinois House committee is close to wrapping up its investigation of whether there’s cause for impeachment, said Rep. Barbara Flynn Currie, committee chair. She said the full House could receive recommendations as early as next week, but it’s not certain. So far, the investigation has focused on whether the governor has abused his executive powers and, to a lesser extent, the federal criminal allegations. The committee still has to decide how many articles of impeachment it would recommend, if impeachment is the majority consensus.

But there are a few loose ends that should be tied up before the committee makes a recommendation one way or the other, according to Rep. Jim Durkin, the Republican spokesperson for the committee. He said he wants to hear Burris testify about his discussions with the governor and his campaign contributions to the governor’s political fund.

“I don’t take anybody’s word at press conferences, anymore,” Durkin said, “particularly when it comes to something of this magnitude and the serious nature of the investigation. I think Mr. Burris owes to the people of the state of Illinois to sit down, swear under oath the circumstances of how this appointment occurred and to swear under oath that he completely has clean hands in this process.”

Meanwhile, Burris filed a lawsuit with the Illinois Supreme Court to challenge Secretary of State Jesse White’s authority to block his appointment.

One other loose end includes whether the House investigation committee will have access to recordings of certain conversations between Blagojevich and members of his inner circle about a gaming bill mentioned in the criminal complaint. A federal hearing is scheduled for Monday.

Even if the feds deny access to the recordings and even if Burris does not testify, Durkin said he thinks the investigative committee could soon make an “informed decision” on whether to recommend articles of impeachment for the full House to consider.

The longer the impeachment process takes, however, the more momentum could build for a special election to replace Obama in the U.S. Senate. Illinois Republicans have been calling for a special election for weeks, but House Democrats were split and did not advance a bill to allow an election. Rep. John Fritchey, a Chicago Democrat, is now sponsoring a measure that is slated for consideration next week. I haven’t gotten a hold of Fritchey, yet, but Currie didn’t sound so positive about the general idea. “I haven’t seen any sign of that moving at this point.”

UPDATE: Just spoke with Fritchey. He said his bill, SB 761, right now is intended to clean up the ethics reforms that just took effect January 1. Some language needed to be clarified so that the state wouldn't miss out on federal highway funds. That means the legislation, as of today, is not about setting a special election to replace Obama. Things could always change.

Tuesday, December 30, 2008

Burris is caught in a nasty political storm

Things just keep getting weirder in Illinois. It’s been widely understood that the U.S. Senate leaders would reject any appointment by Gov. Rod Blagojevich to fill the Senate seat vacated by President-elect Barack Obama. But now, not only is Blagojevich defying the undeniable, he’s also managed to involve race in a situation that already is clouded by sensationalism.

Blagojevich on Tuesday said he is appointing former Illinois Attorney General Roland Burris to fulfill the last two years of Obama’s Senate term, but Burris is unlikely to actually serve in the seat. Secretary of State Jesse White said he is refusing to co-sign the paperwork, thereby blocking the appointment. Even if White lacks authority to do so, all Democratic U.S. senators already announced they would reject the governor’s appointment regardless of whom he picked.

State Treasurer Alexi Gainnoulias said Blagojevich’s actions heighten the need for a quick impeachment. “Regardless of whether he wanted to appoint Mother Theresa or Abraham Lincoln, I believe Blagojevich lost that right when he allegedly attempted to sell the Senate seat to the highest bidder. … Because of Blagojevich’s actions, the appointment process has been tainted and will continue to be tainted as long as he holds office.”

Republicans continue to call for a special election to replace Obama, but the Illinois Democratic leadership did not advance legislation that would allow for that to happen. House GOP Leader Tom Cross said in a Statehouse news conference today that, yes, the Republican Party would stand to benefit from a special election, but it’s the only way to start to clean the stain left by Blagojevich’s arrest December 9. “The special election is the one way to say, not only to this state, but to the country: We learned something. We got it. We’re going to avoid any appearance of impropriety.”

Cross said he was shocked Tuesday morning when he heard the governor would appoint a Senate replacement even though an alleged pay-to-play scheme involving the appointment topped a 76-page criminal complaint against the governor. “I thought it was a joke. Literally, I thought, ‘There’s no way. It’s just some sick, funny, wacky rumor that’s on the Internet, that there’s no way in a million years it’s going to happen. He would not do this.” Cross said he couldn’t take the wildest guess about why the governor would actually follow through on the appointment. Then he pondered that the governor might be akin to a rabid dog in the corner that’s going to lash out in anger at the world.

Cross said Tuesday’s action could quicken the pace of the House committee investigating cause for impeachment.

Whatever the governor’s intentions, Burris is now caught in a political storm that might blow over his 40 years of experience. The Centralia native of southern Illinois became the first African American elected to a statewide office, serving three terms as state comptroller between 1979 and 1991, followed by one term as attorney general. His political experience includes serving as vice chair of the Democratic National Committee from 1985 to 1989.

But his political experience also includes repeated and failed attempts to win higher office. He’s run for governor three times, including in 2002 against Blagojevich. He also ran for the U.S. Senate and for Chicago mayor. Read this Illinois Issues profile of Burris in 1998: “What makes Roland run?

Kent Redfield, political scientist at the University of Illinois at Springfield, said although Burris had been lobbying for Obama's seat and although he’s always had the image of aiming for higher office, it’s surprising that he accepted the appointment. “I think he’s letting his ambition cloud his judgment. He and the governor seem to share one thing, which is that ‘it’s about me.’”

Accepting the position after Blagojevich’s arrest also has potential to taint Burris as "Blagojevich’s senator," Redfield added. “It doesn’t matter if he’s pure as the driven snow.”

Blagojevich actually made a plea to the public during his Chicago news conference, seen on CNN. “I’d like to ask everyone to do one last thing: Please don’t allow the allegations against me to taint this good and honest man.”

The plea thickened when U.S. Rep. Bobby Rush joined the news conference and thanked God for Blagojevich’s selection of Burris because he is an African American with 40 years of public service. He said maintaining an African American seat vacated by Obama is a matter of national importance. “Roland Burris stands head and shoulders above most elected officials in this nation, and so there’s no rhyme or reason that he should not be seated in the U.S. Senate,” Rush said. Then he added this racially-charged challenge: “I don’t think there’s anyone, any U.S. senator, who’s sitting in the Senate right now, [who] would want to go on record to deny one African American from being seated in the U.S. Senate. I don’t think they want to go on record doing that.”

Burris said he had no relationship with “that situation,” referring to the governor’s legal problems. Standing at Blagojevich’s side, he said: “I have no comment on what the governor’s circumstance is. And as a former attorney general of this state, I know, and I think most of you all know, that in this legal process, you’re innocent until you’re proven guilty.”

The House committee investigating impeachment is on hold until at least January 5, when the feds could decide whether to release recorded conversations detailed in the criminal complaint.

Monday, December 29, 2008

Impeachment: Day 5, defense

Things could get a lot more interesting in the Statehouse January 5. Federal prosecutors want to release some of the secret recordings detailed in the criminal complaint against Gov. Rod Blagojevich. If the recordings were released, it would enhance the depth of evidence gathered by the Illinois House committee investigating if there’s cause to impeach Blagojevich.

To this point, there have been two veins of evidence gathered by the committee. One is the criminal complaint filed by the feds. However, the committee has been limited in how far it can delve into the allegations because it was asked not to interfere with the federal probe. The second vein is potential non-criminal offenses, primarily whether Blagojevich abused his executive powers. The governor’s attorney has argued that the committee has failed to meet a burden of proof that the governor did anything other than “chatter” and “jabber” about ways to use his powers.

But if U.S. Attorney Patrick Fitzgerald gets approval from Chief Judge James Holderman to release recordings of four conversations in full and redacted form, the House committee would have potentially criminal evidence, not just political evidence. Fitzgerald technically isn’t required to get court approval before releasing recordings, but his motion filed Monday said he is doing so now “out of an abundance of caution.”

The conversations would be limited to one alleged deal to collect $100,000 in campaign contributions to Blagojevich by January 1 in exchange for his signature on a bill. The bill described in the affidavit would shave 3 percent of riverboat profits to subsidize the horse racing industry.

The description of the conversation — found in paragraph 68(e) on page 39 of the criminal complaint — includes “Fundraiser A,” “Contributor 1” and “Lobbyist 1.” Anyone who thought they would be harmed by the release of the recordings can file a motion to stop the release.

Edward Genson, the governor’s attorney, would not say Monday whether he would fight the release of those recordings. He repeatedly has argued that the wiretaps and bugs of the governor’s conversations were illegally obtained and should not be included as evidence in the House investigation or in a criminal trial.

Genson got his chance to present a formal defense of the governor at Monday’s hearing in the state Capitol.

“The fact is we’re fighting shadows here,” he said to legislators. “We’re fighting unnamed people, we’re fighting witnesses that aren’t available, we’re fighting people that haven’t been indicted, we’re fighting preliminary hearings that haven’t been, we’re fighting parades of allegations that people who are dissatisfied with the administration but certainly haven’t talked to us about criminal conduct. We have a mere complaint.”

Genson said the committee must meet a burden of proof provided in the 1997 impeachment investigation of then-Illinois Supreme Court Justice James Heiple. The standard then, he said, was that non-criminal offenses “must be of a magnitude and gravity comparable to the criminal standard.”

Rep. Lou Lang, a Skokie Democrat on the committee, said this committee is not bound to the standards provided in a 10-year-old case. In fact, he said, the state Constitution only requires that a committee find “cause.”

“Each member of the House of Representatives, and, if it gets that far, each member of the Senate, will decide what ‘cause’ is and what ‘cause’ means,” Lang said. “There is no definition in the law.”

Lang also took issue with Genson’s interpretation of the standard needed for information that is not part of the criminal complaint. “In my view, and I’m going to guess the view of many sitting with me, a non-criminal violation of the Constitution is still a violation of the governor’s constitutional oath,” Lang said. “And, therefore, if this committee finds that the governor has violated his constitutional oath for whatever reason, that would be cause or grounds for possible impeachment.”

Lang also countered Genson’s comments that the conversations outlined in the criminal complaint consist of “chatter” that fail to prove that anything illegal happened. Lang said talk of so-called pay-to-play politics is enough for this committee. “It’s a crime in the state of Illinois to offer to do a public act for value. Whether somebody takes you up on that offer is irrelevant.”

Committee members said they’re weighing the totality of circumstances presented since the governor’s arrest. Yet, many members aren’t exactly keeping a poker face.

“I think a lot of members have begun to make up their minds, at least members on this committee,” said Rep. Gary Hannig, a Democratic member. “And it appears to me that they’re beginning to move towards the side of impeachment.”

The committee is on hold until at least January 5 or until the court decides whether to support Fitzgerald’s release of the selected recorded conversations.

Tuesday, December 16, 2008

Impeachment: Day 1

Jamey Dunn, Public Affairs Reporting intern, contributed to this report.

It’s the first day that the Illinois House is investigating cause for impeaching Gov. Rod Blagojevich, and Kent Redfield already anticipates articles of impeachment from the House and a successful trial by the Senate.

A political scientist at the University of Illinois at Springfield, Redfield said that politically, the governor has forfeited his ability to govern.

Both chambers took actions today that attempt to establish precedent for the proceedings, given that the state Constitution’s vague language and the state’s short history on the process.

The House committee’s investigation will lead to a recommendation about whether to hold actual impeachment proceedings by the full House. More significant action will start Wednesday, when the first witnesses will be called and the rules will be adopted.

Should the House send articles of impeachment over to the Senate, then that chamber is preparing rules to guide a trial. A special committee created today will will draft the rules.

House investigation
But the process starts with the House. Majority Leader Barbara Flynn Currie, chair of the House investigative committee, said she intends to call witnesses to testify, including Ali Ata and Joseph Cari. Both were convicted of felonies related to the federal investigation into the Blagojevich Administration’s hiring and contracting practices

However, the request for witnesses could interfere with the ongoing criminal investigation headed by U.S. Attorney Patrick Fitzgerald. The federal prosecutor asked for a letter with more specific requests about the committee's plans.

Until Fitzgerald’s office responds, members might not meet seven days a week as scheduled. “While we are prepared to work, roll up our sleeves, get it done in a timely but deliberative fashion, we may be stymied early in the investigation by an inability to get clear answers from the United States attorney,” Currie said.

Then again, Redfield said, the effect on the feds’ criminal case is a completely separate issue. “Obviously the legislature’s not going to force someone to testify in ways that would compromise their legal position, but the legislature cannot focus on what this does to the U.S. attorney’s criminal case. The legislature has to focus on what is its political duty, its constitutional duty, in terms of exercising impeachment in a situation that clearly calls for impeachment.”

Even without the U.S. attorney’s cooperation
Even if the feds think the House committee’s proceedings could compromise the criminal investigation, some Democrats and Republicans said they have enough information to go on for impeachment.

Rep. Jack Franks, a Woodstock Democrat and longtime Blagojevich critic, said the plea agreements of Ata and Cari (Ata’s here; Cari’s here) spell out so-called pay-to-play politics, where Ata donated $25,000 to Blagojevich’s political campaign and landed a $125,000 state job soon after. “I’ve been asking for these [hearings] for months, well before this arrest occurred,” Franks said. “I’m confident that we have enough information.”

Franks also intends to discuss two state audits that looked into the governor’s purchase of doses of European flu vaccines that went unused, as well as a $1 million grant mistakenly given to a Chicago school.

The committee might not even need the criminal charges. Showing a significant abuse of power by the executive could itself be adequate cause for impeachment, Currie said.


Political process
That’s partially because the impeachment process is a political proceeding, according to Redfield. While the committee will consider criminal charges filed by the feds, it also will consider the governor’s performance. And it doesn't have to prove anything beyond reasonable doubt. “This is about whether or not the governor has violated his oath of office, whether he is fit to govern or whether he can govern. It’s a political decision.”

Partisan politics also are inevitable. Republicans will have ample opportunity to make Democrats look bad, considering Democrats control every office in this state. Call it retribution for years of GOP fallout from former Gov. George Ryan.

“It’s going to be very easy to get into broad questions of policy and the failures of the Democratic leaders, as well as the governor, to get things done,” Redfield said.

Senate Republicans, in fact, said in a Statehouse news conference this afternoon that they urge an equal number of Democrats and Republicans on the impeachment-related committees to prevent the majority party from being able to cover up facts that could hurt the party’s reputation.

“Is this more about uncovering everything and learning about everything that maybe the governor was involved in, or is it about just selectively trying to carve the governor out of the process and leave everything in place?” said Sen. Dale Righter, a Mattoon Republican. “If the latter is what happens, there will not be reform in Illinois politics. There will just be more of the same.”

Here’s the Senate resolution creating a nine-member committee to come up with the rules for a potential impeachment trial. Democrats have five members, Republicans four.

Impeachment: Day 2 and 3
Wednesday
The real work in the House investigative committee will start Wednesday, when members have invited the governor’s lawyer to testify. Items on the agenda, starting at 11 a.m.:
Thursday
Thursday’s agenda would focus on information not needed from the U.S. attorney’s office. That includes two items:
  • Cases in which the governor might have exceeded his authority, including initiatives he tried to advance through the Joint Committee on Administrative Rules. For instance, the governor tried to enact a FamilyCare health insurance program for middle-income families.
  • Audits of the governor’s effort to secure doses of European flu vaccine without legislative approval.

Obama’s replacement update
To the Senate GOP’s disappointment, the Senate did not consider legislation that would allow for a special election of President-elect Barack Obama’s replacement in the U.S. Senate. The House Democrats asked for more time to consider such a measure, which wouldn’t happen until the General Assembly returns January 12.

Monday, December 15, 2008

Impeachment hearings start Tuesday

Seven days after Gov. Rod Blagojevich’s arrest on federal corruption charges, a special Illinois House committee will start to meet every day, including weekends, other than four days for the holidays, as long as it takes to determine whether there is cause to impeach the governor. But even in crisis, the political rhetoric within the Statehouse today was thick, dashing the hopes of voters and government insiders hoping to see a sense of unity after a week of shocking corruption allegations.

Obama’s replacement
One thing the House will not do tomorrow is advance legislation that would allow for a special election to replace President-elect Barack Obama in the U.S. Senate. House Speaker Michael Madigan said his Democratic caucus was split on the idea and would like some extra time to consider it. The full House is not scheduled to return to Springfield until January 12.

House Republicans used the national spotlight to liken Democrats to enablers of the allegedly corrupt Democratic governor. Republicans like the idea of a special election not only because the GOP would have a chance to snag a Democratic seat, but, more importantly, because an election would avoid the perception of impropriety that plagues the current system of giving one person sole authority to appoint a replacement, said House Minority Leader Tom Cross.

Democratic Rep. Lou Lang of Skokie said there’s nothing inherently wrong with the appointment process, just the person currently holding the power to use it. He said he opposed the idea of changing state law because of one official who was disliked or incompetent.

Various versions of the special election legislation are here:
  • Rep. Jack Franks' version, HB 6730
  • The speaker's empty version, HB 6731
  • Rep. La Shawn Ford's version, HB 6732
  • And the Republicans' version, HB 6733.

Impeachment
The special committee to investigate whether there’s cause for impeachment consists of 21 members, including 12 Democrats and nine Republicans. Democratic members must have served at least six terms. Republicans have not yet released their committee members, as of this post.

The vein of evidence to be collected? “Abuse of power,” Madigan said during a Statehouse news conference this afternoon. “The many instances where the governor took governmental action without authority by the legislature, took governmental action without an appropriation having been adopted, instances where he ignored directives from the legislature.”

Find a one-stop-shop for Blagojevich stories and analysis at Illinois Issues magazine here.

The speaker’s staff has been reviewing grounds for impeachment for about a year, he said. The committee, chaired by Majority Leader Barbara Flynn Currie, also likely would attach the criminal complaint against Blagojevich as evidence. They are asking the U.S. attorney’s office for cooperation in sharing information.

Madigan will preside over the proceedings, which will be public hearings that take place in the state Capitol.

The estimated timeline has ranged from a few weeks to a few months. Madigan said the governor’s decision about whether to attend the proceedings as “invited” could play into how long the process takes. “If he does not appear personally or through an agent, it will greatly shorten the proceedings of the committee. If he appears personally or through an agent, it will lengthen the proceedings of the committee. That’s all I can tell you.”

Whatever the timeline, it’s expected to be thorough. “We are going to move with all deliberate speed, but we’re not going to trample anybody’s constitutional rights in the process,” Madigan said.

If the proceedings run into the next General Assembly, which is scheduled to start January 15, committee members said they would vote to allow their work to carry over.

Currie emphasized that the proceedings aren’t just about Blagojevich. Given the Illinois Constitution’s vague description of the impeachment process, this investigative committee’s actions set precedent for the future, Currie said. “And it is absolutely critical that we do this deliberately, that we don’t rush to judgment, that we don’t say, ‘Because the public is clamoring for his head, we should take the head first and do the trial later.’”

The governor’s office declined to comment.

Thursday, December 11, 2008

It only gets harder

Illinois Gov. Rod Blagojevich’s arrest this week unleashed a fury of activity that a) demonstrates how complicated and unprecedented this week’s events have been in Illinois and b) gives us a potential glimpse into what our future state government could look like.

Everyone agrees that the state legislature needs to act quickly but fairly. Yet, there’s already dissension among the legislative leaders and the second-in-command, Lt. Gov. Pat Quinn. If next week’s emergency legislative session doesn’t foster some kind of consensus-building atmosphere, the national media will continue to sharpen their pencils and take copious notes about how such a screwed up state produced the next U.S. president.

Case in point: CNN’s headline the day after the governor’s arrest: “Illinois state politics read more like a script from ‘The Sopranos’ than a page out of the history books.”

The context
  1. All 50 Democratic U.S. senators indicated they would not seat anyone appointed by Blagojevich to replace President-elect Barack Obama, so that begs the question of how Obama should be replaced: Let the lieutenant governor appoint a replacement, or change state law to let the Illinois voters elect a new senator.
  2. There’s mounting pressure, even from the future president of the United States, for Blagojevich to resign. If he doesn’t, which is somewhat expected for this unpredictable individual, then there’s question of whether the legislature or the state Supreme Court shall kick him out of office.

The intertwined debate
In a very gubernatorial-like news conference from his Statehouse office this morning, Quinn said he doesn’t want to wait for a special election to fill Obama’s Senate seat. He would select a replacement as his first act as governor, if Blagojevich resigns or is forced out.

Quinn added that the governor’s legal problems already cost the state. Standard & Poor’s Rating Services put the state on a negative credit watch, potentially making it more expensive for the state to borrow $1.4 billion to pay down backlogged bills.

“We’re going to have to spend more taxpayer money to borrow $1.4 billion … because we have a cloud, a storm cloud, over the governor of Illinois and his chief of staff,” Quinn said.

The short-term borrowing is delayed by a few days, according to Carol Knowles, spokeswoman for state Comptroller Dan Hynes. She did not comment about why it was delayed but later said, "Everything in state government is in jeopardy as long as the governor remains in office."

The need for that borrowing plan adds to the urgency of why the Illinois General Assembly should immediately address “the source of the problem,” Quinn said, referring to getting Blagojevich out of office. “To focus on anything other than that, I think, is missing the highest priority.”

The House and Senate are scheduled to come back into emergency session Monday and Tuesday, but the intent is to advance legislation that would change state law so that voters could choose Obama’s replacement through a special election.

Quinn frequently speaks of “government by the people and for the people” and said that a special election would be ideal in normal circumstances. But the current scenario would make it more delayed and more expensive — by about half a year and $50 million. Quinn said that lag time would rob the state of a voice while the Congress voted on major decisions for reviving the national economy.

So far, there’s little indication that the chambers will comply with Quinn’s ideas.

Senate Republicans released a statement that supports the call for a special election. Incoming Senate Minority Leader Christine Radogno is quoted in the release as saying: “It is ludicrous to talk about anyone appointing the next United States senator. … There is no way that an appointment process can be free from the stench of this corrupt administration.”

In Illinois, the lieutenant governor and the governor do not run as running mates in the spring primary elections. They get lumped together on the same ticket in the November general election, making Blagojevich and Quinn running mates. Yet, Quinn said this morning that since the 2006 election, he repeatedly has spoken out against Blagojevich for various reasons, including the vastly unpopular idea to levy a gross receipts tax on businesses. Quinn was one of the most vocal supporters of an amendment to the state Constitution to allow voters to recall elected officials, a movement started because of Blagojevich. Quinn also held a rally of sorts outside one of Blagojevich’s fundraising events this year to support ethics reforms that will ban so-called pay-to-play politics, the heart of the federal probes involving Blagojevich.

House Minority Leader Tom Cross said a special election is the only way to help restore the public’s trust in the system. And while not alleging anything improper done by Quinn, Cross said an election would avoid perceptions that the appointment process is tainted.

Impeachment
Cross also introduced the first resolution that could start the impeachment process. It would form a committee to gather evidence and determine whether there’s cause for impeachment. Four House Democrats also released a letter saying they wanted impeachment proceedings to start immediately, allowing for the quicker appointment of a U.S. Senate replacement.

House Speaker Michael Madigan said he’s “prepared to discuss the suggestions of the House Republican Leader.” But it doesn’t look like he’s exactly on board with them. Steve Brown, Madigan’s spokesman, said: “They just want to have a committee to investigate the investigation. That seems like a two-step backward process to me.”

Cross, however, said this afternoon that his proposal is based on House proceedings in 1997. A special investigative committee was formed to gather evidence and decide whether it was enough to move forward with impeachment proceedings for then-Illinois Supreme Court Justice James Heiple. “There’s not a lot of history, here. There’s not a lot of guidance in the Constitution, so we’re trying to respect what the speaker did before,” Cross said. “The bottom line is we want to move forward.”

If Madigan wants to jump right into impeachment proceedings by the full House, Cross said he’s open to that. “I’m not going to block something because the speaker has a different way to go. We just need to move, I think, soon.”

The Heiple impeachment took six weeks. Former President Bill Clinton’s impeachment process took four months. Cross guessed that Illinois could get it done in about month, although no one really knows. “Regardless of the amount of time it takes, I think you need to start the process, or it’ll just hang over us longer and longer and longer.”

Tuesday, December 09, 2008

A “new low” and a challenge for the future

House and Senate members are preparing to return early next week in an emergency session to change state law and call for a special election to replace President-elect Barack Obama in the U.S. Senate. The power to appoint a replacement currently is held by Gov. Rod Blagojevich, but that power is the focus of today’s federal corruption charges against the governor.

“It’s a very sad day for Illinois government,” said U.S. Attorney Patrick Fitzgerald, whose office is spearheading the ongoing corruption investigation. “Gov. Blagojevich has taken us to a truly new low.”

Numerous state officials are requesting that Blagojevich to step aside, resign or prepare for the Illinois House to investigate whether there is cause for impeachment.

The FBI awoke Blagojevich at 6 a.m. with an arrest warrant at his Chicago home, according to Robert Grant, U.S. special agent-in-charge of the FBI’s Chicago office. A day before the governor’s 52nd birthday, he’s charged with extensive political corruption related to the five-year-old Operation Board Games investigation that exposed the rigging of state boards to benefit the governor’s political campaign fund. But the focus of today’s charges are much more appalling, Fitzgerald said. Today’s charges focus on Blagojevich’s actions since October, particularly allegations that he wanted to financially gain from his U.S. Senate selection. See the criminal complaint for details.

Fitzgerald said the complaint made no allegations that Obama knew anything of Blagojevich’s actions.

Obama, heard during an unrelated news conference on CNN, said: “I had no contact with the governor or his office, and so I was not aware of what was happening. It’s a sad day for Illinois. Beyond that, I don’t think it’s appropriate to comment.”

The complaint
Perhaps most surprising to many throughout the day was the timing of the arrests of Blagojevich and his chief of staff, John Harris. Illinoisans have suspected for quite some time that the governor might be indicted. But given the investigations, as well as the corruption trial of convicted felon and Blagojevich insider Tony Rezko, and the upcoming enactment of a new ethics law trying to prevent so-called pay-to-play conduct, it’s shocking that the governor allegedly would participate in a “political crime spree” as recently as a week ago, Fitzgerald said.

“You might have thought in that environment that pay-to-play would slow down. The opposite happened. It sped up,” he said during a Chicago news conference, heard through Web casts.

Fitzgerald said the investigation was made public today in order to stop conduct that could have had dire consequences for the nation, as well as specific individuals.

A 76-page criminal complaint released this morning alleges that Blagojevich feverishly tried to collect as much campaign cash as possible in anticipation of the new ethics law, which was aimed at Blagojevich. Starting in the New Year, it will be illegal for executive officers to collect donations from those seeking significant business with the state. Fitzgerald said recent wiretaps of Blagojevich’s phone revealed that the governor allegedly wanted to ensure the financial welfare of his family and of his political future. Blagojevich’s campaign fund, at last report, was paying a significant amount in legal fees related to the ongoing investigations.

Fitzgerald mentioned more specific allegations:
  • Conspiring to threaten to withhold state aid for the Tribune Co. if it didn’t fire Chicago Tribune board members who were critical of Blagojevich.
  • Conspiring to withhold $8 million state aid for Children’s Memorial Hospital in Chicago if the chief executive officer didn’t donate to Blagojevich’s political campaign.
  • Conspiring to shake down the person who wanted state legislation enacted that would shave profits from the state’s riverboats and casinos to help the horse racing industry compete. (Here’s a statement from the Illinois Harness Horsemen’s Association: “[The association] has not been cited, named or implicated, nor are we involved, in any of the issues contained in the Department of Justice complaint against Gov. Blagojevich.)

The governor’s office issued a statement trying to reassure Illinois residents that this wouldn’t prevent them from accessing services: “Today’s allegations do nothing to impact the services, duties or function of the state.” The paragraph did not indicate whether Blagojevich would step aside or resign.

As of this post, Blagojevich still has the authority to appoint Obama’s Senate replacement and to serve as governor. However, numerous officials are urging the governor to step aside and are working to stop the governor’s power to fill the Senate seat.

The impeachment
In case Blagojevich doesn’t step aside, House Minority Leader Tom Cross requested that the House immediately start impeachment hearings. However, legislators must tread carefully, as Blagojevich is entitled to due process. He’s been arrested, not convicted.

But the Illinois Constitution allows the House to investigate whether there is cause for impeachment, which would require a majority of House members voting to do so (scroll down to Section 14). The state Senate then would conduct a trial, with a state Supreme Court justice officiating. It would take a two-thirds vote of Senate members to convict the governor. The conviction would only remove him from office and prevent him or her from holding any public office in the state. It’s not a criminal conviction.

But given how extremely rare impeachment proceedings are in Illinois, there are no permanent rules for impeachment in Illinois, according to the annotated state Constitution. For how Blagojevich’s arrests fits in with Illinois history, check out our list of legally challenged governors from The Illinois Governors: Mostly Good and Competent.

Kent Redfield, political scientist with the University of Illinois at Springfield, estimated that impeachment proceedings also would take at least a month to conduct. Just like a court case, the process would involve forming an investigation, gathering evidence, calling witnesses and prosecuting and defending the charges. It would be hard to do quickly and shouldn’t be done quickly if the General Assembly wants to ensure due process, he said.

In the meantime, Redfield said the House speaker and the new Senate president could try to “govern around the governor.” We’ll have more on this possibility in the coming days and weeks.

The future
It’s clear that Illinois has a reputation. FBI Agent Grant had this to say: “If it isn’t the most corrupt state in the United States, it’s certainly one hell of a competitor.” He added that agents who listened to the wiretaps “were thoroughly disgusted and revolted by what they heard. And I think even the most cynical agents in our office were shocked.”

Redfield said he, like the FBI agents, hoped that Ryan’s corruption convictions last year would send a message that personally gaining from public office is a thing of the past.

“As long as we allow politicians to treat politics that way, where it’s all about private gain and personal advantage, then we’re going to continue to have this stuff. Thank God for a vigilant, aggressive federal prosecutor. But at some point, the citizens of Illinois have got to start electing better people to public office and applying higher standards.

The kicker: “Because we did reelect this person two years ago.”

How Blagojevich fits into Illinois history

Given today's arrest of Gov. Rod Blagojevich, we thought it might be helpful to consider the context of his arrest. Here is a list of Illinois governors tainted by corruption. Complete with page numbers, the information is gathered by Beverley Scobell at Illinois Issues magazine and contained in The Illinois Governors: Mostly Good and Competent.

Only one governor, Len Small (1921-1929) was indicted while in office. In July 1921, he was indicted by the attorney general whose appropriation he had cut (page 196, new edition of Governors book). Charges were conspiracy and embezzlement of interest money during Small's second term as state treasurer. The criminal trial held in Waukegan in 1922 ended with an acquittal. One historian suggested jury tampering because after the trial, four jurors received state jobs.

Four governors were indicted after their terms ended:
  • William Stratton (1953-1961) was indicted in 1964 for violating income tax laws. He was acquitted on tax evasion charges centered on campaign contributions (page 242)
  • Otto Kerner (1961-1968) was convicted in 1973 of conspiracy, income tax evasion, mail fraud and making false statements on income tax returns. He served 7 months of a 3-year sentence, released on parole when lung cancer was diagnosed (page 250 of the new edition of Mostly Good).
  • Dan Walker (1973-1977) was sentenced after pleading guilty to bank fraud, misapplication of bank funds and perjury in 1987. He served one and a half years of a 7-year sentence (page 272).
  • George Ryan (1999-2003) was indicted the December following his term on charges of tax fraud, racketeering conspiracy and other and crimes related to his actions as secretary of state. He was convicted in 2006 and began serving a 6 1/2 year sentence in November 2007.

One other governor, Joel Matteson (1853-1857), would probably have been indicted under today's laws. In the last year of of his governorship, he engineered the Scrip Scandal (page 80, new edition), where he cashed again notes issued to build the I&M Canal that had been redeemed but not cancelled. The state Senate Revenue Committee indicted him in 1859, held a trial, convicted then reversed the decision and finally acquitted him. He finally repaid the state more than $250,000 ordered by Sangamon County Circuit Court in 1863.