Since 2002, even before he was first elected governor that November, and continuing until he was arrested on Dec. 9, 2008, former Illinois Gov. Rod R. Blagojevich and a circle of his closest aides and advisors allegedly engaged in a wide-ranging scheme to deprive the people of Illinois of honest government, according to a 19-count indictment returned today by a federal grand jury.
Blagojevich, 52, of Chicago, was charged with 16 felony counts, including racketeering conspiracy, wire fraud, extortion conspiracy, attempted extortion and making false statements to federal agents. He allegedly used his office in numerous matters involving state appointments, business, legislation and pension fund investments to seek or obtain such financial benefits as money, campaign contributions, and employment for himself and others, in exchange for official actions, including trying to leverage his authority to appoint a U.S. Senator, announced Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois.
Also charged as co-defendants in the same indictment are:
John Harris, 47, of Chicago. Blagojevich’s chief of staff from late 2005 until last December after he was arrested along with Blagojevich. Through his attorney, Harris, who is charged with a single count of wire fraud, has authorized the Government to disclose that he has agreed to cooperate with the United States Attorney’s Office in the prosecution of this case;
Alonzo Monk, 50, of Park Ridge, Ill. A lobbyist doing business as AM3 Consulting, Ltd., and a long-time Blagojevich associate who served as his general counsel when Blagojevich represented Illinois’ Fifth Congressional District, and later managed his 2002 and 2006 gubernatorial campaigns, was his first gubernatorial chief of staff from 2003 through 2005, and later chairman of his campaign fund;
Robert Blagojevich, 53, of Nashville, Tenn. Blagojevich’s brother, who became chairman of his campaign fund in August 2008;
Christopher Kelly, 50, of Burr Ridge, Ill. A businessman and a principal campaign fundraiser who also served as chairman of Blagojevich’s campaign fund from early 2004 until August 2005. The indictment alleges that with Blagojevich’s knowledge and permission, Kelly at times exercised substantial influence over certain activities of the governor’s office; and
William F. Cellini, Sr., 74, of Springfield, Ill. A businessman who also raised significant funds for Blagojevich, in part through his role as the executive director of the Illinois Asphalt Pavement Association. Cellini had longstanding relationships and influence with trustees and staff members of the Teachers Retirement System of Illinois (TRS), and he was associated with Commonwealth Realty Advisors, a real estate asset management firm that invested hundreds of millions of dollars on behalf of TRS, the indictment alleges.
All six defendants will be arraigned on dates yet to be determined before U.S. District Judge James B. Zagel in Federal Court in Chicago. Blagojevich was charged with 11 counts of wire fraud, two counts of attempted extortion, and one count each of racketeering conspiracy, extortion conspiracy, and making false statements. The specific counts and maximum penalties each defendant is facing are listed separately.
The charges are part of Operation Board Games, a continuing public corruption investigation of pay-to-play schemes, including insider-dealing, influence-peddling and kickbacks involving private interests and public duties. The investigation began in 2003 and has resulted in charges against a total of 17 defendants. Today’s charges were brought in a superseding indictment that replaces one brought Oct. 30, 2008, against Cellini alone for allegedly conspiring with others to obtain campaign funds for Blagojevich by shaking down an investment firm that was seeking a $220 million allocation from TRS.
Mr. Fitzgerald announced the indictment with Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the FBI; Alvin Patton, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division (IRS-CI) in Chicago; Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service (USPIS) in Chicago; and James Vanderberg, Regional Inspector-in-Charge of the U.S. Department of Labor Office of Inspector General.
The indictment adds several new allegations to those that were lodged in the criminal complaint filed in December when Blagojevich and Harris were arrested. It includes the previous factual allegations that Blagojevich conspired to sell or trade Illinois’ U.S. Senate seat formerly held by President Obama; threatened to withhold substantial state assistance to the Tribune Company in connection with the sale of Wrigley Field to induce the firing of Chicago Tribune editorial board members sharply critical of Blagojevich; and schemed to obtain campaign contributions in exchange for official actions – both historically and in a push late last year before a new state ethics law took effect.
Among the new factual allegations are that:
* Beginning in 2002 and continuing after Blagojevich was first elected governor, Blagojevich and Monk, along with Kelly and previously convicted co-schemer Antoin “Tony” Rezko, agreed that they would use the offices of governor and chief of staff for financial gain, which would be divided among them with the understanding that the money would be distributed after Blagojevich left public office;
* In 2003, Blagojevich, Monk, Kelly, Rezko and other co-schemers implemented this agreement by directing lucrative state business relating to the refinancing of billions of dollars in State of Illinois Pension Obligation Bonds to a company whose lobbyist agreed to provide hundreds of thousands of dollars to Rezko out of the fee the lobbyist would collect, and Rezko in turn agreed to split the money with Blagojevich, Monk and Kelly;
* After it became public that Kelly and Rezko were under investigation and ceased playing a significant role in raising campaign funds, Blagojevich personally continued to trade his actions as governor for personal benefits, including, for example, delaying a state grant to a publicly-supported school while trying to leverage a U.S. Congressman, who supported the school, or the Congressman’s brother, to hold a campaign fundraiser for Blagojevich; and
* In an interview on March 16, 2005, Blagojevich lied to FBI agents when he said that he maintains a separation, or firewall, between politics and state business; and he does not track, or want to know, who contributes to him or how much they are contributing to him.
While expanding the allegations, the 75-page indictment is cast somewhat more broadly than the 76-page complaint affidavit, which contained excerpts from court-authorized wiretaps of intercepted conversations that Blagojevich had with others in both his personal office and a conference room in the Chicago offices of his campaign fund, Friends of Blagojevich, located at 4147 North Ravenswood, Suite 300, as well as over his home telephone.
Friends of Blagojevich is not a defendant, but, pursuant to the racketeering count, the indictment seeks forfeiture from Blagojevich of all funds and assets held at four banks in the name of, or on behalf of, Friends of Blagojevich. Although Kelly, Monk and Robert Blagojevich at various times held the post of chairman of Friends of Blagojevich, the indictment states that fund’s activities and financial affairs at all times were controlled by Blagojevich personally and the fund operated for his benefit. The indictment also seeks forfeiture of $188,370 from Blagojevich as proceeds of the alleged fraud scheme and racketeering activity, and lists Blagojevich’s apartment in Washington, D.C., and his Ravenswood Manor home in Chicago as substitute assets.
Separate counts of racketeering conspiracy and wire fraud contain similar, overlapping factual allegations. The RICO conspiracy count alleges that Blagojevich personally, the Office of the Governor of Illinois and Friends of Blagojevich were associated and, together, constituted the “Blagojevich Enterprise,” whose primary purpose was to exercise and preserve power over Illinois government for the financial and political benefit of Blagojevich, both directly and through Friends of Blagojevich, and for the financial benefit of his family members and associates. Blagojevich and Kelly, the only RICO conspiracy defendants, allegedly conspired with Monk, Cellini, Harris, Robert Blagojevich, Rezko and previously convicted cooperating defendant Stuart Levine, to conduct the Blagojevich Enterprise through a pattern of multiple acts of mail and wire fraud, extortion, attempted extortion and extortion conspiracy, and state bribery.
As part of the racketeering conspiracy, Blagojevich allegedly permitted Kelly and Rezko to exercise substantial influence over certain gubernatorial activities, as well as state boards and commissions, knowing that they would use this influence to enrich themselves and their associates. In return, Kelly and Rezko allegedly benefitted Blagojevich by generating millions of dollars in campaign contributions and providing financial benefits directly to Blagojevich and his family.
The principle fraud scheme count, which names Blagojevich, Monk, Harris and Robert Blagojevich as co-schemers, together with Kelly, Cellini, Rezko, Levine and others, alleges that they deprived the people of Illinois and the beneficiaries of TRS of the honest services of Blagojevich, Harris, Monk and Levine, who was a member of the Illinois Health Facilities Planning Board and the TRS board of trustees.
The alleged fraud scheme provides the most detailed recitation of the various factual allegations in the indictment. It alleges that Blagojevich, Monk, Kelly and Rezko 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 addition, the indictment sets forth the following allegations as part of the fraud scheme:
Maintaining Control Over TRS
In the spring of 2003, Kelly Rezko, Cellini, and Levine agreed that Kelly and Rezko would use their influence with the Blagojevich administration to assist Cellini and Levine in maintaining influence over the activities of TRS, and in return, Cellini and Levine would use their influence to cause TRS to invest in funds, and to use law firms, selected by Kelly and Rezko, at times in exchange for substantial contributions to Friends of Blagojevich.
The Solicitation of Ali Ata
In late 2002, Ali Ata, a businessman who previously pleaded guilty and is cooperating, and who was solicited by Rezko to make political contributions to Blagojevich, brought a $25,000 check to Rezko’s offices, where Ata met with Blagojevich. Blagojevich asked Rezko if Rezko had talked to Ata about positions in the administration, and Rezko said that he had. In July 2003, after discussions with Rezko about possible state appointments, Ata gave Rezko another $25,000 check payable to Blagojevich’s campaign. Ata then had a conversation with Blagojevich at a fundraising event in which Blagojevich indicated that he was aware Ata recently had made another substantial contribution to his campaign, and told Ata that he understood Ata would be joining his administration. Ata replied that he was considering taking a position, and Blagojevich said that it had better be a job where Ata could make some money. Blagojevich ultimately appointed Ata as the executive director of the Illinois Finance Authority.
The Solicitation of Joseph Cari
On Oct. 29, 2003, Joseph Cari, then a Chicago lawyer and a national Democratic fundraiser who has also pleaded guilty and is cooperating, was traveling on a plane with Blagojevich, Kelly and Levine to a Blagojevich fundraiser that Cari hosted in New York. Cari and Blagojevich spoke about Cari’s fundraising background and Blagojevich’s interest in running for President. Blagojevich said it was easier for governors to solicit campaign contributions because of their ability to award contracts and give legal work, consulting work, and investment banking work to campaign contributors, and that Kelly and Rezko were his point people in raising campaign contributions. Blagojevich said that Rezko and Kelly would follow up with Cari about this discussion.
Sometime after October 2003, Rezko told Cari that Rezko had a close relationship with the Blagojevich administration and a role in picking consultants, law firms and other entities to get state business, and that Monk helped implement Rezko’s choices for state work. Rezko said that the Blagojevich administration would be helpful to Cari’s business interests in exchange for raising money for Blagojevich.
On March 5, 2004, Cari met with Kelly, who said he was following up on Cari’s conversations with Blagojevich, Rezko and Levine. Kelly asked for Cari’s help in raising money on a national level for Blagojevich. When Cari said he was not inclined to help, Kelly pushed Cari to assist and said that helping Blagojevich would be good for Cari’s business interests and that Cari could have whatever Cari wanted if he agreed to help.
Campaign Contributions Solicited for TRS Investments
In March 2004, Lobbyist A met with Kelly to ask how two of Lobbyist A’s clients could become eligible to manage investments for TRS. Kelly told Lobbyist A that TRS was Rezko’s area, and later told Lobbyist A that he had spoken with Rezko, and that it would require a $50,000 campaign contribution to Blagojevich for a firm to get on TRS’s list of recommended fund managers.
The Attempted Extortion of Capri Capital
In April 2004, Levine, Rezko and Kelly agreed that unless Capri Capital or one of its principals, Thomas Rosenberg, arranged to raise or make significant political contributions for Blagojevich, Capri Capital would not receive a proposed $220 million investment from TRS. They further agreed that Cellini would deliver that message to Rosenberg.
In early May 2004, Levine advised Cellini of the plan, which Cellini assisted by indicating to Rosenberg that Capri Capital had not yet received its $220 million allocation from TRS because of its failure to make political donations to Blagojevich. After Rosenberg told Cellini that Rosenberg would not be extorted and he threatened to expose the attempt by informing law enforcement, Cellini ensured that Kelly, Rezko and Levine learned about Rosenberg’s threat.
On May 11, 2004, Cellini, Levine, Rezko and Kelly agreed that in light of Rosenberg’s threat to expose the extortion attempt, it was too risky to continue demanding money from him or to block the $220 million allocation to Capri Capital. They agreed that although Capri Capital would receive the $220 million allocation, it would not receive any further business from any state entity, including TRS. After the discussion, Cellini and Levine took steps to conceal the extortion plan, including using their influence and Levine’s position at TRS to ensure that Capri Capital received its $220 million allocation.
(A separate fraud conspiracy count against Kelly and Cellini alleges that in the summer of 2004, they discussed with Rezko and others moving TRS Staffer A - the Executive Director of TRS – to another job with a different state entity to ensure that he would not cooperate with law enforcement. And, in the summer and fall of 2004, Cellini, Rezko and others allegedly discussed the possibility of removing the U.S. Attorney for the Northern District of Illinois to stop the investigation.)
Rezko told Cellini and Levine, in separate conversations, that Blagojevich had been told about the attempt to extort Rosenberg, and Blagojevich had said that Rosenberg meant nothing to him.
Benefits Given to Blagojevich and Monk
To ensure that Blagojevich and Monk continued to give Rezko substantial influence regarding appointments to boards and commissions, hiring for state employment, and the awarding of state contracts, grants, and investment fund allocations, Rezko gave certain benefits to Blagojevich and Monk including the following:
* In late August 2003, Rezko directed to Blagojevich’s wife a payment of $14,396 in connection with a real estate transaction involving property at 850 North Ogden Ave., Chicago, even though Blagojevich’s wife had not performed any services;
* From approximately October 2003 to May 2004, Rezko, through his real estate development company, gave Blagojevich’s wife payments of $12,000 a month, purportedly for real estate brokerage services;
* In January 2004, Rezko directed to Blagojevich’s wife a payment of $40,000 purportedly for brokerage services in connection with the sale of property at 1101 West Lake St., Chicago, even though Blagojevich’s wife had provided few, if any, services relating to that sale; and
* From the spring of 2004 until 2006, Rezko provided to Monk a number of $10,000 cash gifts to pay for various items, such as a car and home improvements, totaling approximately $70,000 to $90,000.
The Search for Employment for Blagojevich’s Wife
After Blagojevich’s wife’s real estate business became the subject of critical media coverage, Blagojevich directed Harris to try to find a paid state board appointment or position for her. During several conversations in early 2008, Blagojevich informed Harris that he wanted his wife put on the Pollution Control Board, which pays salaries to its board members. When Harris told Blagojevich that his wife was not qualified for the position, Blagojevich told him to find other employment for his wife.
In the spring of 2008, around the time that Blagojevich’s wife passed a licensing exam that allowed her to sell financial securities, Blagojevich asked Harris and others to set up informational or networking meetings for his wife with financial institutions that had business with the state in hopes that those businesses would assist in getting his wife a job. Harris later arranged meetings between Blagojevich’s wife and officials at two financial institutions that had business with the state. When Blagojevich concluded that officials at these institutions were unhelpful in finding his wife a job, he told Harris that he did not want the institutions receiving further business from the state.
Attempted Extortion of United States Congressman A
In 2006, after Congressman A inquired about the status of a $2 million grant for the benefit of a publicly-supported school, Blagojevich instructed Harris not to release the grant until Blagojevich gave further direction, even though Blagojevich previously had agreed to support the grant and funds were included in the state’s budget.
In response to inquiries by a high-ranking state official as to whether the grant money could be released, Blagojevich informed that official that Blagojevich wanted it communicated to Congressman A that the congressman's brother needed to have a fundraiser for Blagojevich.
Blagojevich told Lobbyist A that Blagojevich was giving a $2 million grant to a school in Congressman A’s district and instructed Lobbyist A to approach Congressman A for a fundraiser. After Blagojevich learned from Harris that the school had started to incur expenses that were to be paid with the grant funds, Blagojevich initially resisted the release of the grant money, and ultimately agreed to the release of certain grant funds to cover incurred expenses, but only on a delayed basis, even though no fundraiser had been held.
Attempted Extortion of Children’s Memorial Hospital
On Oct. 8, 2008, defendant Blagojevich advised Lobbyist A that he intended to take official action that would provide additional state money to Children's Memorial Hospital in Chicago, and that Blagojevich wanted to get $50,000 in campaign contributions from the hospital’s chief executive officer.
On Oct. 17, 2008, Blagojevich called the hospital’s CEO to tell him of his intent to increase the Illinois Medicaid reimbursement rate for speciality-care pediatric physicians. Shortly before this, Blagojevich had directed Deputy Governor A to initiate such an increase, which Illinois providers of pediatric healthcare, including Children’s Memorial Hospital, had actively supported for years.
On Oct. 22, 2008, Blagojevich spoke with the Children’s CEO and asked him to arrange to raise $25,000 for Blagojevich prior to Jan. 1, 2009. On Nov. 12, 2008, after the Children’s CEO had not returned additional phone calls from Robert Blagojevich and no political contributions from the Children’s CEO or other persons associated with the hospital had been received, Blagojevich spoke to Deputy Governor A about the increase in the Medicaid reimbursement rates for specialty-care pediatric physicians, asking whether “we could pull it back if we needed to. . . .” As a result of this conversation, Deputy Governor A instructed the Department of Healthcare Services to stop its work on increasing the reimbursement for specialty-care pediatric physicians.
Attempted Extortion of Racetrack Executive
On Nov. 13, 2008, Blagojevich told Robert Blagojevich that he wanted campaign contributions to be made by the end of the year by Racetrack Executive, who, as Blagojevich knew, managed horse racing tracks that would financially benefit from a bill pending in the Illinois General Assembly that would require certain Illinois casinos to give money to a fund that would help the state’s horse racing industry. At that time, as Blagojevich knew, Monk had been trying to arrange a contribution from Racetrack Executive, and Blagojevich had set a goal of raising $100,000 in contributions from and through this individual.
Blagojevich had further conversations with Monk about the horse racing and casino bill after it was passed by the state legislature on Nov. 20, 2008. Blagojevich and Monk discussed whether and when Blagojevich would sign the bill, and whether and when Racetrack Executive would arrange for a campaign contribution to Blagojevich. On Dec. 3, 2008, Blagojevich indicated to Monk that he was concerned that Racetrack Executive would not make a contribution by the end of the year if he signed the bill before the contribution was made. As a result, Monk and Blagojevich agreed that Monk would speak with Racetrack Executive to ensure that he would make a contribution by the end of the year.
After meeting with Blagojevich on Dec. 3, 2008, Monk visited Racetrack Executive and told him that Blagojevich was concerned that Racetrack Executive would not make a contribution to Blagojevich if the bill was signed before the contribution was made. After meeting with Racetrack Executive, Monk reported to Blagojevich that Monk had said to Racetrack Executive, “look, there is a concern that there is going to be some skittishness if your bill gets signed because of the timeliness of the commitment,” and made it clear to Racetrack Executive that the contribution has “got to be in now.” Blagojevich responded, “good” and “good job.”
On Dec. 4, 2008, Monk asked Blagojevich to call Racetrack Executive and to suggest that Blagojevich would sign the bill, because this would be better “from a pressure point of view.” Blagojevich agreed to call Racetrack Executive.
Attempted Extortion of Highway Contractor
On Sept. 18, 2008, Blagojevich, Monk and Robert Blagojevich met with Construction Executive, who was both an executive with a company that manufactured and distributed road building materials and a representative of a road construction trade group. Blagojevich said that he was planning on announcing a $1.5 billion road building program that would be administered through the Illinois Toll Highway Authority and that he might authorize an additional $6 billion road building program later on. Blagojevich then asked for Construction Executive’s help in raising contributions for Blagojevich’s campaign by the end of the year. After Construction Executive left the meeting, Blagojevich instructed Monk to try to get Construction Executive to raise $500,000 in contributions. As Blagojevich knew, Monk later had a series of conversations with Construction Executive about the possibility of arranging for campaign contributions to Blagojevich.
On Oct. 6, 2008, Blagojevich told Lobbyist A that he would make an announcement concerning a $1.8 billion project involving the tollway and that Monk would approach Construction Executive to ask that he raise substantial campaign contributions. Blagojevich further said that he could have announced a larger amount of money for road projects, but wanted to see how Construction Executive performed in raising contributions, and he added words to the effect of “If they don’t perform, [expletive] ‘em.
On Oct. 22, 2008, approximately one week after Blagojevich publicly announced a portion of a $1.8 billion program to upgrade interchanges on the tollway system, Blagojevich called Construction Executive, spoke with him about the $1.8 billion program, and asked how he was coming with fundraising.
Efforts to Obtain Personal Financial Benefits for Blagojevich in Return for his Appointment of a United States Senator
Between October and Dec. 9, 2008, Blagojevich, with the assistance of Harris and Robert Blagojevich, and others, sought to obtain financial benefits for himself and his wife, in return for exercising his duty under Illinois law to appoint a United States Senator to fill the vacancy created by the election of President Barack Obama.
Blagojevich engaged in numerous conversations with others, at times including Harris and Robert Blagojevich, certain high-ranking employees of the Office of the Governor, and certain political consultants, to devise and set in motion plans by which Blagojevich could use his Senate appointment power to obtain financial benefits for himself and his wife. At times, Blagojevich directed others, including state employees, to assist in these endeavors, including by performing research and conveying messages to third parties. Blagojevich and his co-schemers devised and discussed obtaining financial benefits in the following forms, among others:
* Presidential appointment of Blagojevich to high-ranking positions in the federal government, including Secretary of Health and Human Services or an ambassadorship;
* A highly-paid leadership position with a private foundation dependent on federal aid, which Blagojevich believed could be influenced by the President-elect to name Blagojevich to such a position;
* A highly-paid leadership position with an organization known as “Change to Win,” consisting of seven affiliated labor unions, which, in a transaction suggested by Harris, could appoint Blagojevich as its chairman with the expectation that the President-elect would assist Change to Win with its national legislative agenda;
* Employment for Blagojevich’s wife with a union organization, lobbying firm, or on corporate boards of directors;
* A highly-paid leadership position with a newly-created, not-for-profit corporation which Blagojevich believed could be funded with large contributions by persons associated with the President-elect; and
* Substantial campaign fundraising assistance from individuals seeking the United States Senate seat and their backers, including from Senate Candidate A, whose associate Blagojevich understood to have offered $1.5 million in campaign contributions in return for Blagojevich's appointment of Senate Candidate A.
Further, Blagojevich discussed with his co-schemers means by which he could influence the President-elect to assist him in obtaining personal benefits for himself and his wife, including by appointing to the Senate a candidate whom Blagojevich believed to be favored by the President-elect. At times, Blagojevich attempted to further this goal by conveying messages, directly and with the assistance of others, to individuals whom he believed to be in communication with the President-elect.
On Dec. 4, 2008, Blagojevich instructed Robert Blagojevich to contact a representative of Senate Candidate A, and advise the representative that if Senate Candidate A was going to be chosen to fill the Senate seat, some of the promised fundraising had to occur before the appointment. Blagojevich instructed Robert Blagojevich to communicate the urgency of the message, and to do it in person, rather than over the phone. Robert Blagojevich agreed to do so, and thereafter arranged a meeting with an associate of Senate Candidate A.
On Dec. 5, 2008, following the publication that day of a newspaper article reporting that Blagojevich had been surreptitiously recorded in connection with an ongoing federal investigation, Blagojevich instructed Robert Blagojevich to cancel his meeting with the associate of Senate Candidate A, and Robert Blagojevich agreed to do so.
The Government is being represented by Assistant U.S. Attorneys Reid Schar, Carrie Hamilton and Christopher Niewoehner.
If convicted, the maximum penalty for each offense is set forth in the accompanying chart. The Court, however, would determine the appropriate sentence to be imposed under the advisory United States Sentencing Guidelines.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. Further, the indictment makes allegations that Blagojevich at times directed others to take various actions, but it should not be read to allege that those other persons carried out those directions unless the indictment specifically alleges so.
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