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Feds link governor to probe
2 convicted insiders say Blagojevich offered state business for backing
 

December 22, 2007

Chicago Tribune
By John Chase and David Kidwell

Federal prosecutors for the first time brought their corruption investigation to the desk of Gov. Rod Blagojevich, making public Friday the allegations of two convicted insiders who say the governor offered them state business for their political backing.

In a 78-page court filing that identifies the governor only as "Public Official A," federal authorities detailed the accusations of the two former political operatives who have already pleaded guilty in a shakedown scheme and are cooperating with prosecutors.

Blagojevich told one of the men he "could award contracts, legal work and investment banking to help with fundraising," according to the filing.

The other insider, Stuart Levine, described a flight home from a New York trip during which he thanked Blagojevich for reappointing him to an influential and allegedly corrupt state hospital board.

"You stick with us and you will do very well for yourself," Blagojevich replied, according to the court document.

Levine did not have a direct conversation with Blagojevich about the board activities but he understood the governor "meant that Levine could make a lot of money working with Public Official A's administration," according to the filing.

The court filing does not identify Blagojevich by name, but points clearly to the governor as that public official. Sources familiar with the investigation confirmed his identity Friday.

The governor's office reiterated his assertion that he is not Public Official A.

"Based on the description in the filing, it is not the governor," a Blagojevich spokeswoman said in an e-mail. The governor's press office also said Blagojevich never had the conversations described in the court filing.

"This administration does not do business that way," the spokeswoman said.

The incidents are detailed in a required filing that lays out key elements of the federal government's case against Blagojevich adviser and fundraiser Antoin "Tony" Rezko, 52, whose trial is scheduled to begin in February.

Rezko attorney Joseph Duffy said his client denies 'the hear- say allegations that make up the government's one-sided submission. We are confident that the government's case relying on Stuart Levine will not withstand the scrutiny of a jury."

Blagojevich has struggled to keep his distance from the federal investigation as subpoenas, indictments and guilty pleas targeted his campaign and key advisers. But the document offers the clearest indication yet that prosecutors are seeking to tie the governor directly to a scheme to wring campaign donations and kickbacks from companies seeking state business.

One allegation in the document describes a conversation between Blagojevich and longtime Democratic fundraiser Joseph Cari, who also has pleaded guilty as part of a conspiracy to seek millions of dollars in kickbacks from firms wanting work with the $30 billion state teacher pension fund.

Blagojevich asked Cari about his fundraising experience and told Cari he had "lots of ways of helping his friends," according to the filing.

"Public Official A also informed Cari that he could award contracts, legal work and investment banking to help with fundraising," the court filing stated.

The filing offers more details about the case against Rezko, once one of the governor's closest advisers and fundraisers. U.S. Atty. Patrick Fitzgerald has described the scheme as "payto- play politics on steroids."

Prosecutors allege Rezko used his influence with top officials in Blagojevich's office in the spring of 2004 to ensure Levine and other allies were appointed to or retained on a state hospital planning board and the state?s Teachers' Retirement System board. Rezko then worked with Levine and others to force kickbacks from firms doing business with the state, according to the indictment.

Blagojevich reappointed Levine to the teachers' pension board in 2004. A year earlier, the governor also reappointed Levine to the state's Health Facilities Planning Board, the agency in charge of approving hospital construction and expansion. Rezko previously served on the hospital panel.

In the filing Friday, Levine said that on the New York trip he thanked Blagojevich for reappointing him to the hospital board.

"Public Official A responded that Levine should only talk with 'Tony [Rezko] or Co- Schemer B about the board,' " the filing states.

The only other passenger on the plane was the fundraiser identified as "Co-Schemer B." The Tribune has identified him as Christopher G. Kelly, the governor's former campaign chairman who was indicted last week on unrelated tax charges.

Kelly pleaded not guilty Friday.

Attorneys for Kelly, Cari and Levine declined to comment on the allegations.

The document describes Cari as rejecting offers from Rezko and Kelly to become the national finance chairman for Blagojevich. Kelly told Cari he "could have any contract or state appointment he wanted if he agreed," the filing said.

But again Cari refused, the filing states.

The document provides details from dozens of recorded telephone conversations Levine had about the scheme with top political operatives throughout Illinois.

The filing also details how Levine befriended Rezko during a meeting at the Standard Club in Chicago in the spring of 2004 in which he explained to Rezko that they each would receive $3.9 million from the fees Levine expected would be paid by various investment firms and at least one hospital.

While Rezko's indictment alleges he and Levine displayed a pattern of attempting to extort several firms, federal prosecutors said Rezko netted $250,000 in only one instance in which the two succeeded. Levine stopped efforts to coax money from other firms after FBI agents interviewed him in May 2004, alerting him to the ongoing investigation, according to the filing.