Illinois Governor, Aide Arrested in Probe of Senate Appointment

Rod Blagojevich has led a charmed life since being elected governor of Illinois in 2002 – “charmed” as in large numbers of people wondering why he hadn’t been arrested. His good fortune recently ended. And his removal from office might not be the end of the questions swirling around the incoming Obama presidency. The governor, now 52, along with his chief of staff, John Harris, 46, were arrested in the early morning hours of Tuesday, December 9 by FBI agents on charges of conspiring to sell or trade the U.S. Senate seat recently vacated by President-Elect Barack Obama to the highest bidder. A 76-page FBI affidavit released by the U.S. Attorney’s Office for the Northern District of Illinois reveals Blagojevich apparently caught on court-authorized wiretaps and listening devices making self-incriminating statements. Organized labor, as it turns out, played more than a peripheral role in this scandal.


Any time a governor of a major state is arrested, it’s a blockbuster story. What gives this story extra urgency is that it revolves around the replacement of the Senate seat Obama vacated in November to oversee his transition to the White House. The affidavit nowhere implicates Obama. The truth is Obama and Blagojevich were never on close terms to begin with. Yet it’s also a fact that the rise to power of each was made possible by a network of Chicago power brokers of which organized labor is a part. And the local union presence can’t be divorced from the national presence. Unions and allied campaign committees nationwide during the 2008 election cycle contributed an estimated $450 million to overwhelmingly Democratic candidates. With Barack Obama entering the White House and even larger Democratic majorities taking control of Congress, labor officials believe their long-delayed policy wish list at last will come to fruition.


The case is an outgrowth of a five-year federal investigation that already has nabbed several Chicago movers and shakers. According to the FBI’s criminal complaint, “Governor Blago” allegedly told an adviser on November 5, the day after the elections, “a Senate seat is a [expletive] valuable thing…You don’t just give it away for nothing.” In a conversation with Harris the previous day, the governor compared his situation with that of a sports agent shopping a free-agent player to the highest bidder. U.S. Attorney Patrick J. Fitzgerald announced that the charges “allege that Blagojevich put up a ‘for sale’ sign on the naming of a United States Senator.” The governor allegedly had in mind, among others, U.S. Democratic Reps. Danny Davis and Jesse Jackson Jr., to succeed Obama. In Illinois, the governor has the sole authority to appoint a successor to fill out a U.S. Senator’s term.


There is high irony here. Blagojevich first ran for governor, successfully, in 2002 as a reformer, vowing to clean up the mess left by his Republican predecessor, George Ryan. Ryan, along with dozens of others who worked for him during his years as Illinois secretary of state and governor, had been convicted for participating in a scheme to sell driver’s licenses to illegal immigrants. Many of the recipients of the licenses caused accidents, and on more than one occasion those accidents were fatal. Ryan is serving a 78-month federal prison sentence. But Blagojevich, whose election ended a seven-term run of GOP control, had his own demons – and apparently some high-level help.


The central player in this affair is convicted Chicago real estate developer and political fundraiser Antoin “Tony” Rezko. How close are Rezko and Blagojevich? An article in the November 2007 issue of Chicago magazine put it this way: “Rezko became a virtual one-man headhunting firm for staffing the Blagojevich administration, sending along recommended candidates, many of whom ended up getting appointments.” This is significant because the U.S. Attorney’s Office by then had charged Rezko with scheming to pack the state government with his cronies to peddle influence. Mr. Rezko was all over the news this past year for his key role in raising money for Obama’s run for president. He’s awaiting sentencing following convictions on fraud and other charges.


Federal prosecutors in particular charge that Blagojevich schemed with Rezko and several other persons, including the now-convicted Stuart Levine, to obtain financial benefits for himself and his campaign committee. Readers of Union Corruption Update will recall Levine was a financial manager with close ties to managers of teachers’ union pension funds. Levine, a former board member of the Illinois Teachers Retirement System (TRS), pleaded guilty in U.S. District Court in October 2006 to charges of mail fraud and money-laundering. He allegedly conspired with Rezko to obtain control over lucrative teachers’ union-sponsored contracts that required firms seeking to do business with Illinois TRS and the Illinois Health Facilities Planning Board to pay kickbacks to secure approval of their applications. Levine was the key federal witness in that case. He’s got little to lose by testifying again.


The other major labor connection is the Service Employees International Union (SEIU), now with two million members. SEIU Locals 100 and 880 have provided extensive political muscle for the campaigns of Obama, Blagojevich and other Democrats. Both locals are de facto creations of the Association of Community Organizations for Reform Now, or ACORN. The group’s chief organizer, Wade Rathke, formally resigned his position this past June in the wake of accusations that he’d facilitated an illegal transfer of roughly $950,000 in funds to a political consulting operation run by his brother, ACORN chief financial officer Dale Rathke. ACORN foot soldiers in 2004 and 2006 in various states were investigated for filling out and submitting to local authorities batches of voter-registration cards with false or misleading information. In some cases, they pleaded guilty. The registration fraud was even worse in 2008.


The Service Employees, which contributed about $85 million of the $450 million in union cash contributions to parties and candidates, has been implicated in the new Blagojevich scandal. The union long has been a major backer of Blago, who facilitated organizing drives throughout the state. The arrangement isn’t illegal. But it does explain the preponderance of its citations in the Justice Department complaint. The affidavit reads in part:


Later on November 7, 2008, Rod Blagojevich discussed the open Senate seat in a three-way call with John Harris and Advisor B, a Washington, D.C.-based consultant. Rod Blagojevich indicated in a call that if he was appointed as Secretary of Health and Human Services by the President-elect, then Rod Blagojevich would appoint Senate Candidate 1 [Note: reportedly Obama friend and transition team leader Valerie Jarrett] to the open Senate seat.] Harris states, “We wanted our (request) to be reasonable and rather than…make it look like some sort of selfish grab for a quid pro quo.” Rod Blagojevich stated that he needs to consider his family and that he is ‘financially hurting.’ Harris said that they are considering what will help the ‘financial security’ of the Blagojevich family and what will keep Rod Blagojevich ‘politically viable.’ Rod Blagojevich stated, “I want to make money.” During the call, Rod Blagojevich, Harris and Advisor B discussed the prospect of working a three-way deal for the open Senate seat. Harris noted that Rod Blagojevich is interested in taking a high-paying position with an organization called “Change to Win,” which is connected to the Service Employees International Union (SEIU). Harris suggested that SEIU officially make Blagojevich the head of Change to Win and, in exchange, the President-elect could help Change to Win with its legislative agenda on a national level.


The affidavit reads elsewhere: Also, Rod Blagojevich wanted to know whether SEIU could do something to get his wife a position at Change to Win until Rod Blagojevich could take a position at Change to Win….Harris said they could work out a three-way deal with SEIU and the President-elect where SEIU could help the President-elect with Rod Blagojevich’s appointment of Senate Candidate 1 to the vacant Senate seat, Rod Blagojevich would obtain a position as the National Director of the Change to Win campaign, and SEIU would get something favorable from the President-elect in the future.


If that were not enough, an internal memo from the SEIU’s Illinois office indicated that a union official, Tom Balanoff, had spoken with Blagojevich twice, once in person, about the possibility of naming a candidate for the vacant Senate seat. The communiqué also indicated that FBI agents visited Balanoff’s house at about 6 A.M. Tuesday, the very time during which other agents were arresting the governor. Balanoff’s office issued a press release the next day saying he was fully cooperating with the federal probe. SEIU officials vehemently deny their union was involved in any way in attempts at bribing or otherwise influencing the naming of a senator.

The oddest thing about this whole affair is that Blagojevich knew he was under surveillance yet continued to act as though everything was normal. The Chicago Tribune ran a front-page story in its December 5 edition reporting that the FBI had recorded the governor’s conversations as part of a criminal investigation. Yet even afterward the governor made self-incriminating wiretapped comments. His chief of staff and indicted co-conspirator, John Harris, announced his resignation three days after his arrest.  It’s only a matter of time before Blago goes as well. Many in his party are demanding nothing less. His eventual replacement will inherit a cartload of problems, one of them a state public-employee pension deficit estimated at roughly $43 billion.

As for Barack Obama, he hasn’t been accused or implicated in anything illegal. But the company he’s kept over the years has raised questions about his ability to govern without undue influence. “I’m from Chicago,” Barack Obama often said on the presidential campaign trail in response to those doubting his ability to make tough decisions or engage in high-level negotiations. This scandal isn’t quite the ticket for affirming civic pride. (U.S. District Court, 12/9/08; Washington Post, 12/10/08; Washington Times, 12/10/08; American Spectator Online, 12/10/08; National Review Online, 12/10/08; Wall Street Journal, 12/11/08, 12/13-14/08).