Special Ticket Report: Illinois politics, Rod Blagojevich and Barack Obama

Because of the federal arrests today of Illinois Democratic Gov. Rod Blagojevich and his chief of staff on charges involving, in effect, selling the nomination to replace Barack Obama in the U.S. Senate, the Ticket is republishing a Special Report backgrounder that first appeared here in April.

It examined the frequently seamy world of Illinois politics in general and specifically the case involving Antoin "Tony" Rezko, onetime political patron of now-President-elect Barack Obama, and his ally, the current governor, who despite his arrest retains the right to appoint the new senator.

Although the run-of-the-mill political/financial back scratching that occurs routinely in Illinois and Chicago and sometimes crosses the line into corruption got scant attention from the national media during this year's presidential campaign, which focused on change and reform, it is a daily fact of life in the Land of Lincoln.

Illinois' last governor, George Ryan, a Republican, is now serving time in federal prison for selling favors. Before him there was former Gov. Otto Kerner and numerous others who ran afoul of the law, including one secretary of State whose apartment was found packed with shoe boxes of checks worth millions from applicants for driver's licenses.

It's an, uh, interesting state. Here's the previous Ticket item:

The trial of Antoin “Tony” Rezko, onetime patron to Sen. Barack Obama and Illinois Gov. Rod Blagojevich, has turned lurid.

Under cross-examination by Rezko attorney Joseph Duffy, star prosecution witness Stuart Levine, a Chicago-area lawyer, is admitting to conspiracy, extortion, bribery, fraud and other bad acts while he "served" at the Illinois public school teachers pension fund board.

At Duffy's urging, Levine is detailing 30 years of drug usage including sordid day-long binges with other men at a Chicago inn called the Purple Hotel. Rezko's attorney Duffy is wondering whether all that cocaine, crystal meth and other drug use has perhaps fogged Levine's memory.

That aside, much of the trial's focus is on money -- much of it given in the form of campaign money in the careers of Obama and Blagojevich.

It’s an unfolding, seemingly local political story that’s fascinating in its revealing details about the subterranean world of business, financial and family connections in Illinois and Chicago politics that helped take a virtually unknown black Chicago attorney, nurtured him politically and financially and turned him into....

...the polished candidate who today thrills crowds of thousands across the country with his eloquence.

Obama currently leads in delegates for the Democratic nomination for president.

This tale is long by Ticket standards. We'll do this rarely. But for those interested in delving into details, it provides important background about the early political connections of a little-known newcomer to the national political scene.

This story concerns two men, neither of whom face any legal charges today. They are two of Illinois’ top Democratic politicians -- Gov. Blagojevich, who's been mentioned often in court, and Sen. Obama, who's received only passing mentions. They're entwined in the Rezko saga, particularly through the bounteous campaign money he raised for them both.

Get used to that name. Rezko's currently in a long-running Chicago trial on federal extortion and bribery charges. Few campaign donors were more responsible than Rezko for the rise of Blagojevich (Blah-goy-ah-vitch) and Obama. Both politicians came to rely on him for political and personal advice -- and lots of campaign money.

Their intimate relationship is coming into focus through Rezko, a Syrian-born businessman who made his money in real estate and restaurant franchises and now sits daily in the federal courtroom of U.S. District Judge Amy St. Eve. The trial's daily events are covered in this Tribune Rezko court blog.

So far, Blagojevich, reelected in 2006, is more deeply enmeshed in the scandal than Obama, who's not been implicated in any wrongdoing.

But all three operated in the murky world of Illinois Democratic politics, where money, family relationships and long business associations provide the invisible glue of the local political world.

Witnesses in Rezko’s trial have testified that Rezko recommended friends and associates for government jobs and posts on Illinois state boards when Blagojevich took office in 2003, and some of those friends were generous donors to Blagojevich.

An early trial exhibit from prosecutors was a spreadsheet. Prepared by an FBI agent , the spreadsheet identifies Rezko-related donors who supplied $1.43 million between 2001 and 2004 to Blagojevich, who was first elected governor in 2002.

Using Federal Election Commission and Illinois state records, The Times' Dan Morain compared donors on the FBI spreadsheet to Obama’s contributors. Guess what.

Sen. Obama received $222,000 during the same 2001-2004 period from Rezko-related Blagojevich donors.

And Obama received at least another $32,000 from them for this presidential run -- although Rezko, indicted in 2006, has not been involved in Obama’s current campaign.

Those Obama-Blagojevich donors include Rezko himself, along with his family members, employees and associates of his various business enterprises. There’s also the head of a major Chicago investment firm that received Illinois public teachers' pension money to invest.

Jay Stewart, of the nonprofit government watchdog Better Government Assn. in Chicago, called the overlapping list of donors a “who’s who of the inner circle” of Democratic politics in the Land of Lincoln.

“Did they come from the same general political environment?” Stewart said of Blagojevich and Obama. “Yes. They’re Chicago pols. They both knew Tony Rezko. Tony Rezko raised money.”

In his presidential race, Obama increasingly has relied on small donations delivered via the Internet from more than a million individuals. But when he started in Illinois politics, Stewart noted, “if you wanted money, you needed to ask the big boys.”

Rezko was a big boy. He was, for instance, a link between Obama and Santa Monica developer Jay Wilton of Wilton Partners. On July 16, 2003, Wilton gave $5,000 to Obama’s first U.S. Senate run. A few days later, Wilton gave $50,000 to Blagojevich, Illinois state records show.
Unlike the federal system, Illinois state campaign finance law permits donors to give as much as they want to state candidates. So, in Illinois they do.

In early 2004, Wilton and Rezko spent $78,000 on a Los Angeles-area fundraising tour for Blagojevich, Illinois campaign records show. Three Southern California companies donated a combined $150,000 to the Illinois governor during the trip.

Shortly before the initial $50,000 donation, Blagojevich announced that Wilton would begin work on an $83-million state contract to refurbish rest stops on Illinois tollways, called "oases."

Some of the restaurant concessions granted the right to operate at those rest stops "trace back" to Blagojevich’s patrons including Rezko, the Chicago Tribune disclosed in 2005. Wilton, who did not return repeated calls, is not implicated in the Rezko case.

Another overlapping donor is John Rogers, head of Ariel Capital, a major Chicago-based investment firm. Rogers gave $12,500 to Blagojevich in 2004, the FBI spreadsheet shows. Rogers has also given Obama $25,000, state and FEC records reveal.

Aides to Obama and Rogers said the pair have a friendship that is separate from Rezko. Ariel Vice President Matt Yale said Rogers’ inclusion on the FBI spreadsheet was a surprise, adding, "To the best of our knowledge, we have not made any contributions to Governor Blagojevich or any political candidate on behalf of Tony Rezko." Ariel is not implicated in the criminal case.

As an Illinois state senator, Obama appeared before Illinois pension funds in 2000 and 2001 to urge that they provide more business to black-owned investment houses, including, as it happens, Ariel.

Describing his efforts to the Urban League last year, Obama said African American-owned firms were not getting any business from state pensions. Obama singled out Rogers’ Ariel Capital, calling it a well-respected investment house but one that received no business.

"We didn't have to implement a formal program," Obama told the Urban League, taking no credit. "I simply said, 'Listen to what these folks have to say,' and in about six months they got about a half billion dollars worth of business simply on their own excellence."

In 2002, the year after Obama made the pitch, the Illinois Teachers' Retirement System reported an 18% increase in assets managed by minority-owned firms. Ariel’s share grew to $442 million by 2005.

In 2006, after the federal investigation became public, the teacher pension board severed its relationship with Ariel, concluding that Ariel’s investment returns were insufficient.

As he was for Blagojevich in his initial run for governor in 2002, Rezko in 2003 and 2004 was part of Obama’s finance committee, responsible for raising campaign money.

Obama started out as a long shot. The main candidate was Blair Hull, a wealthy businessman who was financing his own campaign. But less than three weeks before the primary, a court unsealed multimillionaire Hull's divorce file, which alleged spousal abuse. The divorce case so damaged Hull that he finished third in the race. The four-year anniversary of that primary passed on Palm Sunday.

The eventual winner of that primary: Barack Obama.

-- Andrew Malcolm

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Photo credits: Associated Press / Nam Y. Huh, Democratic Governors Assn.

Comments

[John Ryskamp]

Why Obama’s Next

I. FROM THE BLAGOJEVICH INDICTMENT

35. As described more fully in the following paragraphs, Mercy Hospital, which sought permission from the Planning Board to build a hospital in Illinois, received that permission through Rezko’s exercise of his influence at the Planning Board after Rezko was promised that Mercy Hospital would make a substantial campaign contribution to ROD BLAGOJEVICH. Rezko later told a member of the Planning Board that Mercy Hospital received the permit because ROD BLAGOJEVICH wanted the organization to receive the permit.

36. Levine’s criminal activities included his abuse of his position on the Planning Board to enrich both himself and Friends of Blagojevich. The Planning Board was a commission of the State of Illinois, established by statute, whose members were appointed by the Governor of the State of Illinois. At the relevant time period, the Planning Board consisted of nine individuals. State law required an entity seeking to build a hospital, medical office building, or other medical facility in Illinois to obtain a permit, known as a “Certificate of Need” (“CON”), from the Planning Board prior to beginning construction.

37. Levine, as well as Planning Board members Thomas Beck and Imad Almanaseer, testified under oath at the Rezko Trial.9 Beck testified that he asked Rezko to reappoint him to the Planning Board and that Beck thereafter followed Rezko’s directions regarding which CON applications Rezko wanted approved. Beck testified that it was his job to communicate Rezko’s interest in particular CONs to other members of the Planning Board, including Almanaseer, who were loyal to Rezko. Beck testified that he understood that Rezko spoke for the Blagojevich administration when Rezko spoke to Beck about particular CONs. Almanaseer testified that Beck instructed him that Rezko wanted Almanaseer to vote a particular way and that Almanaseer should follow Levine’s lead in voting on CONs. Almanaseer testified that before certain Planning Board meetings, he received notecards from Beck indicating how to vote on certain CON applications. Beck testified he provided these notecards to Almanaseer and certain other members of the Planning Board to communicate Rezko’s directions about certain CON applications.

38. During his testimony, Levine described a plan to manipulate the Planning Board to enrich himself and Friends of Blagojevich. The plan centered on an entity commonly known as Mercy Hospital (“Mercy”) that was attempting to obtain a CON to build a new hospital in Illinois. Levine knew the contractor hired to help build the hospital. In approximately November 2003, on behalf of the contractor, Levine checked with Rezko to determine whether Rezko wanted Mercy to obtain its CON. Rezko informed Levine that Mercy was not going to receive its CON. According to Levine, he asked Rezko whether it would matter to Rezko if Mercy’s construction contractor paid a bribe to Rezko and Levine and, in addition, made a contribution to ROD BLAGOJEVICH. Levine testified that Rezko indicated that such an arrangement would change his view on the Mercy CON.

39. Levine’s testimony regarding Rezko’s actions to change the Planning Board decision concerning Mercy’s application for a CON based on contributions for ROD BLAGOJEVICH is confirmed by attorney Steven Loren. Loren testified at Rezko’s criminal
trial and, before that, in the grand jury.11 According to Loren, in approximately December 2003, Levine informed Loren that Rezko was against the Mercy CON. According to Loren, Levine relayed to Loren a conversation between Rezko and Levine during which Levine asked Rezko whether a political contribution to ROD BLAGOJEVICH would make a difference for Mercy’s CON, and Rezko responded to Levine that such a contribution might
make a difference.

40. Thereafter, and confirmed by the testimony of Levine, Beck, and Almanaseer, as well as recorded conversations, Rezko switched his directions to Beck and informed Beck that Mercy was to receive its CON. According to Almanaseer, although he previously had been told by Beck that Rezko did not want Mercy to receive its CON, he was later told that there had been a change and that Rezko now wanted Mercy to receive its CON.

41. Mercy received its CON as a result of a controversial and irregular vote at a public Planning Board meeting.12 The vote brought significant publicity to the Planning Board and ultimately led to the disbanding of the Planning Board. Almanaseer testified under oath in the grand jury that not long after the Planning Board vote on Mercy’s CON he saw Rezko at a fundraiser. According to Almanaseer, he was still embarrassed about what had occurred at the Planning Board vote on Mercy’s CON and Rezko’s role in the vote. Almanaseer testified that he asked Rezko why Rezko had switched the vote on the Mercy CON. According to Almanaseer, Rezko stated: “The Governor wanted it to pass.”

II. FROM EVELYN PRINGLE’S “CURTAIN TIME” ONLINE ARTICLES

Tony Rezko is a private citizen. Therefore, the evidence presented in the trial focused on his influence over officials in getting members appointed to the Boards. Prosecutors did not discuss how the legislation got passed that enabled the Planning Board to be set up in a way that allowed for the appointment of members to rig the votes to begin with.

That part of the scheme will likely be detailed in future indictments, probably starting with Blagojevich. Blagojevich signed the Illinois Health Facilities Planning Act with an effective date of June 27, 2003. However, before he could sign the act, a bill had to be passed by the Illinois House and Senate. As discussed fully in Curtain Time Part II, Obama was the inside guy in the senate who pushed through the legislation that resulted in the Act.

Obama was appointed chairman of the Senate Health and Human Services Committee. The minute the bill was introduced, it was referred to his committee for review. The sponsors of the bill also served on this committee with Obama. Within a month, Chairman Obama sent word to the full senate that the legislation should be passed.

On May 31, 2003, Senate Bill 1332 passed and specified that the “Board shall be appointed by the Governor, with the advice and consent of the Senate." The legislation reduced the number of members from 15 to 9, paving the way for the appointment of a five-bloc majority to rig the votes.

The corrupt members appointed included three doctors who contributed to Obama. Michel Malek gave Obama $10,000 on June 30, 2003 and donated $25,000 to Blagojevich on July 25, 2003. Malek also gave Obama another $500 in September 2003.

Fortunee Massuda donated $25,000 to Blagojevich on July 25, 2003, and gave a total of $2,000 to Obama on different dates. After he was appointed, Dr Imad Almanaseer contributed a total of $3,000 to Obama. Almanaseer did not give money to Blagojevich.

When the first pay-to-play scheme was put in play, and the application for approval of a new hospital was submitted, the Department of Human Services, along with four other Illinois agencies, sent recommendations that the project should be approved even though experts said the hospital was not needed.

During the trial, Rezko’s attorney presented an email exchange to the jury that hinted at Obama's role in setting up the scheme. The exchange showed that Obama and seven other top Illinois politicians consulted on the legislation passed in 2003 and were involved in recommending the members for the board.

Matthew Pickering wrote the memo to Blagojevich’s general counsel, Susan Lichtenstein, on behalf of David Wilhelm, a former chairman of the Democratic National Committee, who headed Blagojevich's 2002 campaign for governor.

Pickering said he and Wilhelm had “worked closely” over six months with state legislators. The memo recommended the appointees listed above and stated, “our attached recommendations reflect that involvement” with the political leaders.

The persons appointed to rig the votes, including those who contributed to Blagojevich and Obama, are cooperating in exchange for immunity or lighter prison sentences.

Feds shut down pay-to-play schemes

Only two pay-to-play schemes succeeded before the Feds swooped in and shut them all down. Blagojevich did not receive the $1.5 million from the Planning Board deal because the hospital was never built.

But Obama received $20,000 from the first kickback paid in the pension fund scheme and the straw donors used to funnel the $10,000 payments, Elie Maloof and Joseph Aramanda, also made $1,000 contributions to Obama's failed run for Congress in 2000.

In addition, Aramanda gave $500 to Obama's senate campaign on June 30, 2003. In the summer of 2005, Aramanda's son landed an intern position in Obama's Washington office.

Obama also received contributions for his senate campaign from the two persons appointed to rig the vote on the pension fund board. On June 30, 2003, Jack Carriglio contributed $1,000, and the other appointee, Anthony Abboud, donated $500 on June 30, 2003, $250 on March 5, 2004, and $1,000 on June 25, 2004.

The person chosen to funnel the kickback in a future scheme, Michael Winter, donated $3,000 to Obama on June 30, 2003.

All these people are also cooperating in exchange for immunity or lesser prison sentences but prosecutors pointed out during closing arguments that people who entered into agreements with the government are required to tell the truth or all deals are off.

[Robert Hurley]

I really have to take issue with one statement here that is very misleading. " Blagojevich, reelected in 2006, is more deeply enmeshed in the scandal than Obama, who's not been implicated in any wrongdoing" more deeply emeshed - since he is not emeshed at all, the staement is true blut imples that he is enmeshed in some way

[suzyku]

You people just won't stop will you?! Get over yourself fool!

[Girl with the bushy armpits]

This story reminds me of Chaplin's Great imposter and
also Of Larry,Curly and Moe who are now played by
Blagojevitz,Rezko and Obama. John mccain should start
preparing for inauguration and gov. Judas can kiss his
appointment goodbye.

[Web Smith]

The brazenness and amount of expectation with which Blagojevich talked about these things would lead one to believe that they are just SOP and he just made the wrong person mad along the way.

Hopefully, the FBI won't stop here but will pass go and begin collecting all of the kleptocrats. Blagojevich, no doubt, has a lot of information to pass on for the right deal.

It would be a good time to review the warnings from our more principled public servants.

http://ewebsmith.com/gov/JFKWarning.html

[PatG]

The swiftness with which this take-down of a rising voice is happening sure looks indecent to me. Very similar to how Spitzer was taken down, and also Governor Siegelman. Governor Siegelman was thrown into jail right before the election and literally put into solitary!!! He is not guilty of ANYTHING but being in the way of the Republican who wanted to win. Rove was involved- and you know what kind of protection Rove gets from our Just-us (previously known as Justice) system.

Spitzer was entrapped (using the illegal wiretapping being used against ALL American citizens) for having had the balls to tell the truth in an obscure page of the Washington Post:
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783_pf.html

The swiftness of everyone trying to silence and put away this Governor of Illinois is an obstruction of justice and a swiftboating of the man. There is too much theater in all of this! Does that not look ridiculously suspect? Certainly the justice system can do its job without all of this show-boating! They are just trying to get him immediately out of the way! You have to ask WHY?

[Tom]

"You have to ask WHY?"

BECAUSE HE'S CORRUPT and can taint the obamessiah.

This is the kind of thing Nancy and her "culture of corruption" crap was meant to obscure.

http://en.wikipedia.org/wiki/Culture_of_corruption

[Grant Devereaux]

Let's see, Obama received political contributions from people who also donated to Blagojevich. Is that really anything to report on? I contributed to McCain in 2000 and Obama in 2008. How is that relevant to Obama? Is Obama a secret Republican because I once contributed to a republican - actually to many Republicans. This article is reaching for something that simply is not there.

[Lisa O]

The governor of Illinois has likely seen his last payday in office. In the next large political scandal, FBI agents arrested Rod Blagojevich on federal corruption charges, along with his chief of staff, John Harris. This isn't the first politician to ever be arrested for corruption, nor will it be the last, no doubt, but it is the second governor of Illinois to be arrested on corruption charges in a row. The last governor of the state, George Ryan, was also arrested, and later convicted of federal charges. This is really a shameful illegal action for Blagojevich. Blagojevich, in a callously opportunistic move, was trying to see just who would pay what he wanted in order to get the seat in the United States Senate, vacated by Barack Obama after his winning the Presidential election. Blagojevich wanted a personal salary, a paid corporate board seat for his wife, and a cabinet post for himself after his term as governor in exchange for appointment to the US Senate. Blagojevich has stated that whatever he has said has been lawful. (Richard Nixon, anyone?) His resignation has been called for, and impeachment is already being discussed, so he may have seen his last payday as governor. His desire to gain much money leads him to very serious cases that may come to his removal on his position for sure. Click to read more on Blagojevich courtesy of Personal Money Store's Payday Loan News.

[FX]

Blagojevich was just about as bad as it gets. He taught it was still the 1920's and 1930's. If he did not think that then there was only one other thought process going on in his small mind, which was he was in a third world country and not the US.

How a person could be smart enough to get elected governor of a state and behave this way, is completely beyond me. But, we have seen it before and I am sure we will see it again.