Blagojevich Conviction Only Partly Reveals Culture of Corruption

Blagojevich photoLast August, things looked sunny for former Illinois Democratic Governor Rod Blagojevich. He and his lawyers had just obtained a hung jury on 23 of 24 corruption charges. But Justice Department prosecutors, confident they had their man, continued to pursue the case – and this time with different results. Last Monday, June 27, a Chicago federal jury, after nine days of deliberation, found the man known as “Blago” guilty on 17 of 20 charges, nearly a dozen of them related to his attempts during the fall of 2008 to fill the pending Senate vacancy left by President-Elect Barack Obama in return for campaign cash. Blagojevich’s play-for-pay schemes got him arrested that December and removed from office a month later. While the case highlights corruption in Chicago, its real significance may lie in shedding more light on the political networks making possible Obama’s rise.

Even before Inauguration Day, Rod Blagojevich had been a dark cloud hanging over the Obama administration. In the wee hours of December 9, 2008, FBI agents arrested Gov. Blagojevich and his chief of staff, John Harris, on various charges, mainly related to acts of shakedown and bribery. A 76-page FBI affidavit released by the U.S. Attorney’s Office for the Northern District of Illinois indicated Blagojevich had made self-incriminating statements on court-authorized wiretaps and listening devices during several years of FBI surveillance of political corruption in Chicago. He was indicted for wire fraud, bribery and racketeering.

It wasn’t the first time a ranking public official in Illinois had been enmeshed in scandal. Since 1972, in fact, nearly 80 Illinois federal, state and local officials have been convicted on charges of misusing public office for personal gain. The list includes four governors (including Blagojevich), 15 state legislators, two congressmen, 27 Chicago aldermen and 19 Cook County judges. Harris would plead guilty to wire fraud in July 2009. But the governor, convinced of his innocence, decided to go to trial. It would be a family affair. His brother, Robert Blagojevich, also was charged with offenses related to political fundraising.

First elected governor in 2002 as a reformer, Blagojevich, a former three-term congressman, more than ever served as a pivot man in the Chicago patronage machine. Court records showed that he and his wife, Patti, though a high-earner couple, had even higher spending patterns, and slid deep into debt. To maintain his political profile, Gov. Blagojevich sought revenue through shakedowns and bribery. The big opportunity came during the weeks leading up to and following Election Day 2008. Senator Barack Obama soon would vacate his seat to become President. Under Illinois state law, the governor had the authority to appoint a successor to serve out his term. Any number of persons would have given an eyetooth for that job. Blagojevich, hardly a political novice, sent out the word: Obama’s seat was for sale in exchange for a generous contribution to the governor’s treasure chest. Just keep a low profile.

The governor considered various candidates for the job. Two stood out: Barack Obama mentor Valerie Jarrett and Rep. Jesse Jackson Jr., D-Ill., son of radical civil-rights activist Jesse Jackson. After the election, Obama had given clear indications Jarrett was his first choice, though no outward evidence indicated he was willing to pay a bribe. Still, Jarrett was the unnamed “Adviser B” cited in the FBI affidavit; Harris’ wire fraud conviction had been based on phone conversations with Blagojevich and a close ally of the governor, lobbyist John Wyma, in which he discussed the possibility of securing her appointment with the help of the Service Employees International Union (SEIU). Recordings revealed Blagojevich wanted someone who was able and willing to bring serious money to the table. Jarrett, though on the short list, might not suffice after all. President-Elect Obama and his transition team, headed by his future White House chief of staff Rahm Emanuel (currently Chicago mayor), backed away from Blagojevich when the latter’s motive had become too transparent for comfort. Jarrett was smart enough to ask Obama to withdraw her name from consideration.

As for Congressman Jackson, FBI-recorded evidence pointed to Gov. Blagojevich seeking to boost his political war chest by $6 million. Raghuveer Nayak, a businessman in Chicago’s large and growing Indian ethnic community, would raise the first $1 million, and following the appointment, Jackson would raise the remaining $5 million – early reports put the grand total at $1.5 million. Jackson denied this scheme in December 2008, only days after Blagojevich’s arrest: “I never sent a message or an emissary to the governor to make an offer, plead my case, or propose a deal about a U.S. Senate race, period.” Yet testimony last July at Blagojevich’s first trial tells a different story. Rajinder Bedi, another Chicago Indian businessman, stated he’d met with Jackson and Nayak at a downtown Chicago restaurant on October 28, 2008 during which time Jackson expressed a clear interest in the seat for a price of $1 million. Former Deputy Governor Robert Greenlee said a few days later of Jackson during a recorded phone conversation with Blagojevich: “I’m tellin’ ya, that guy’s shameless.” Replied the governor: “Unbelievable, isn’t it…we approached, pay to play. That, you know, he’d raise me 500 grand, an emissary came, then the other guy would raise a million, if I made him a senator.”

Prosecutors, led by U.S. Attorney Patrick Fitzgerald, believed they had an airtight case in light of the FBI affidavit and the many hours of incriminating wiretapped and bugged conversations between Gov. Blagojevich and his aides. The defense, taking no chances, called forth no witnesses. Not even Blagojevich testified, despite his previous vow that he would. The jury was deadlocked on all key charges. Last August, following a two-week deliberation, jurors came back with a guilty verdict on only one of 24 counts, and a minor one at that – Blagojevich had made false statements at a March 16, 2005 meeting with FBI agents indicating he did not know who contributed, or in what amounts, to his campaign fund.

Despite facing up to five years in prison, the ex-governor and his attorneys felt vindicated. On virtually every count, they had won a mistrial. “They could not prove that I did anything wrong…except one nebulous charge from five years (before), a conversation with FBI,” said Blagojevich. “I want the people of Illinois to know I did not lie to the FBI. I have told the truth from the very beginning and this is a persecution.” Jurors failed to convict his brother as well.

But victory for the defense would be short-lived. Prosecutors were convinced they had solid evidence of “years of dirty schemes.” To maximize the likelihood of convictions, they dropped the racketeering counts against Blagojevich and all counts against his brother. This time the former governor took the witness stand for a full week, continuously denying wrongdoing. This jury, however, saw more than political back-scratching. It convicted him on 17 of 20 counts, including all 11 related to his attempts to sell Obama’s Senate seat to the highest bidder.

In addition to peddling a U.S. Senate seat – he eventually settled on former Illinois Attorney General Roland Burris (now succeeded by Republican Mark Kirk, who won by election last November) – Governor Blagojevich solicited “contributions” for his future career plans. In a recorded phone call to SEIU Local 1 (Chicago) chieftain Tom Balanoff, Blagojevich expressed his desire for Obama to set him up with a plum job once his tenure was up; a cabinet-level post or a union-sponsored nonprofit foundation executive job would do. When it became clear that the future president wouldn’t oblige him, Blago responded: “They’re not willing to give me anything except appreciation. Fuck them.” The conversation with Balanoff also prompted this exchange between Blagojevich and prosecutor Reid Schar during the second trial:

Schar: “You tell Tom Balanoff you want $25 million [in the foundation’s fund and then a job there.]
Blagojevich: “Possibly work there.”
Schar: “You wanted the money quickly?”
Blagojevich: “So I could fight for health care and join the fight.”

Later in testimony, Schar tripped up the former governor by asking, “Did you mean to communicate with Mr. Balanoff that you would give (Valerie) Jarrett the Senate seat if you got your funding for your 501(c)(4)?” Responded Blagojevich: “No, I didn’t mean to do that.” These and other statements eventually convinced the jury that Blagojevich had solicited bribes. After the verdict was read, one juror explained, “He proved himself guilty beyond any reasonable doubt. He kept saying ‘Do it!’ ‘Push it!’ ‘Get it done!’ That’s where he crossed the line.”

As Blagojevich faces up to 300 years in prison, an appeal is almost inevitable. His lawyers already had filed a motion for a mistrial on June 9, a couple weeks before the verdict, alleging that U.S. District Judge James Zagel had a “closed mind” in admitting evidence. “If you look at the whole process, he was condemned from the moment he was arrested,” said one of Blagojevich’s lawyers, Sam Adam Jr. Any appeal or retrial likely will claim the judge had barred the playing of certain recordings crucial to the defense and limited the cross-examination of government witnesses. He has a point: Prosecutors played 90 hours of recordings, while the defense got to play only four hours.

Yet the former governor’s prospects for a reversal of all charges are exceedingly slim. For one thing, an appeals case by nature is an uphill battle, especially since many judges themselves are former trial judges. Worsening the odds is that Blagojevich is severely short on a key commodity it takes to win an appeal: money. The trial court, in fact, declared him indigent. Any lawyer who represents him is unlikely to be the sort of high-powered, take-no-prisoners type he needs to have a fighting chance of staying out of prison. Further dimming Blagojevich’s prospect is that the recent retrial jury deliberated for nearly 10 days, hardly a rush to judgment.

But the ultimate obstacle to a reversal is the weight of evidence. John Harris, Blagojevich’s convicted former chief of staff, testifying for the government, referred on May 31 to three of five “shakedown schemes” prosecutors had described earlier in opening statements. Moreover, his testimony lent further credibility to the charge that the governor tried to sell Obama’s seat. In an FBI-recorded call to Harris, Blagojevich could be heard asking, “I’m the governor of a $58 billion corporation, (so) why can’t I be ambassador to India?” In another call to Harris in November 2008, the governor listed several administration jobs he would like have in return for appointing Valerie Jarrett to the seat. Among them: ambassador to South Africa; ambassador to the United Nations; and Secretary of Commerce.

Harris’ immediate predecessor, Lon Monk, also provided damaging testimony. Monk, who had been Blagojevich’s roommate during their days at Pepperdine Law School, stated in the retrial that during his tenure as the governor’s chief of staff, he (Monk) accepted between $70,000 and $90,000 in cash payments from Chicago political fixer Tony Rezko starting in May 2004 to buy a particular car. He also described how by the fall of 2008 Blagojevich had grown increasingly desperate about the shortfall in his campaign coffers. “He was consistently concerned about the amount of fundraising that was going on,” Monk said of the governor. “It was never enough.” At the first trial, Monk had testified in detail about how Rezko explicitly described and diagrammed how to divide the proceeds of cash kickbacks from state-approved deals. Monk already had pled guilty in October 2009 to one count of wire fraud in connection with an attempt to squeeze a racetrack owner for a $100,000 campaign contribution to Blagojevich in return for the governor signing a bill taxing casino revenues to subsidize racetracks. Blago signed the legislation, but never received the money.

This leads to the aforementioned Antoin “Tony” Rezko, the real estate developer, restaurateur and political fundraiser who arguably is the linchpin of this whole case. The Syrian-born Rezko, who turns 56 this month, has been languishing in a Wisconsin jail awaiting sentencing, tentatively set for this October. He had been convicted by a federal jury in June 2008 on 16 of 24 charges related to fraud, bribery, money-laundering and attempted extortion. The convictions, which involved an estimated $7 million in business kickbacks, stemmed from a federal probe, Operation Board Games, into Chicago-area corruption. Rezko and a Blagojevich campaign donor, Stuart Levine, were indicted for various offenses in 2006; Levine quickly pleaded guilty to using his seat on two Illinois state regulatory boards (one related to a teachers union retirement fund) to shake down businesses for millions of dollars in “contributions” on behalf of “a certain public official.” That official turned out to be Gov. Blagojevich.

Rezko, who addition to his prior convictions, pleaded guilty last fall to loan fraud in connection with his pizza parlors, had close ties to Blagojevich. He was a major source of Blago’s campaign financing, making a combined $117,652 in direct donations over the years, and bundling outside contributions totaling about $1.44 million. He also vetted candidates for appointed office. An article in the November 2007 issue of Chicago magazine put it this way: “Rezko has been a virtual one-man headhunting firm for staffing the Blagojevich administration, sending along recommended candidates, many of whom ended up getting appointments.”

Yet despite this partnership, the prosecution did not call Tony Rezko to testify at either of Blagojevich’s trials. This was especially strange, noted Rezko attorney Joe Duffy, because his client was “ready, willing and able to testify” against Blagojevich and his wife, Patti Blagojevich; concerning the latter instance, Rezko allegedly helped launder a $40,000 sham real estate brokerage fee on her behalf in 2004. Lead prosecutor Patrick Fitzgerald, without explanation, dropped all charges against Blagojevich involving Rezko, surely yet another incongruity given that prosecutors previously had described Rezko as “the man behind the curtain, pulling the strings.” Thomas Bennett, publisher of the blog site Nuclear Chicago, gave this ominous interpretation in a May 25 posting during the retrial:

Simply put, Antoin “Tony” Rezko is the only witness that can bury Blagojevich and the Chicago Political Thuggery Machine. Why is Fitzgerald holding back Rezko? What has been promised or implied to Fitzgerald as a ‘reward’ for Fitzgerald’s blatant sandbagging efforts?

Bennett believes prosecutors are trying desperately to avoid calling Rezko to the witness stand so as “to avoid presenting any evidence that links Obama to this corruption.” Perhaps they were intimidated by the fact that Obama in March 2008, while still a U.S. senator, admitted that Rezko had raised about $250,000 for his political campaigns over the years.

One only can speculate. But it is a fact that Obama’s longtime mentor, Valerie Jarrett, whose White House job title is Senior Advisor, also has a Rezko connection. As a longtime executive of a real estate development and management company, The Habitat Co. – she became CEO in January 2007 – Jarrett had overseen several multifamily housing projects in the Chicago area, many located in Barack Obama’s Illinois Senate district. She also has served on the boards of several organizations that provided subsidies for her projects and those of other developers, Tony Rezko among them. Despite large infusions of public money, many Habitat Co.-managed dwellings were in poor condition. Indeed, some were uninhabitable to the point of being seized by the Department of Housing and Urban Development. Rezko, through his own company, Rezmar, received $87 million worth of subsidies over nearly a decade to renovate hundreds of apartment dwellings. Many of those as well were in, or became, severe disrepair.

Jarrett, being in the same line of work as Tony Rezko, knew the value of rewarding political benefactors. Indeed, over the years she helped Rezko raise funds for Democratic Party candidates, especially Barack Obama. As part of its full-scale investigation three years ago of the economics and politics of Chicago’s subsidized housing, the Boston Globe concluded that “six prominent developers,” including Jarrett and Rezko, donated a combined more than $175,000 to Obama’s various political campaigns over the previous decade and bundled “hundreds of thousands more” from additional donors. The upward trajectory of Obama’s political career would have been virtually unimaginable without the help of Jarrett, say insiders. “She (Jarrett) knows where all the bodies have been buried in the past 30 or so years of Chicago politics, and she knows all the tricks,” remarked a prominent local Democratic Party consultant a few years ago. “If Obama had a political and financial godmother, it would be Valerie.”

This probably isn’t the last we’ll see of this case. Rod Blagojevich has all but promised to appeal. Whether Rezko gets to testify depends largely on whether Patrick Fitzgerald, a man of seemingly limitless ambition in his own right, remains lead prosecutor. As Fitzgerald dreads posing a threat to the Obama administration, he’s more than likely to veto the idea of testimony by Rezko. A federal district court this March rejected a motion by Rezko’s lawyers to obtain a retrial for their client in light of the Supreme Court’s ruling last June restricting “honest services” prosecutions. If federal prosecutors want to get to the root of this affair, they need to cast aside expediency and call Tony Rezko to the witness stand.


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