Chris Kelly pleads guilty to O'Hare scheme - UPDATED UPON HIS DEATH

By Bethany Jaeger
Christopher Kelly, a close adviser and fundraiser for former Gov. Rod Blagojevich, died Saturday, September 12, just days before he was to report to federal prison to serve at least eight years for two of three criminal cases against him. He was 51.

Law enforcement officials reportedly were looking into a drug overdose.

Kelly would have been a key figure in the ongoing corruption trial of Blagojevich, scheduled to go to court in June 2010. Kelly was indicted as part of “Blagojevich Enterprise,” an extensive scheme that allegedly began in 2002 to use the governor’s office for private and political gain, including auctioning off the U.S. Senate seat once held by President Barack Obama. Kelly was indicted along with the former governor; his brother, Robert Blagojevich; former campaign manager and lobbyist Alonzo Monk; Springfield lobbyist William Cellini; and former chief of staff John Harris. Kelly pleaded not guilty to those charges.

Shortly before his death, however, he pleaded guilty today to two counts of mail fraud in one of three federal indictments against him. But it's unknown whether he was cooperating in the ex-governor's ongoing corruption trial.

Read his plea agreement here. The Burr Ridge resident UPDATED: was supposed to report to jail September 18 and agreed to forfeit $450,000 for a scheme of rigging roofing contracts with two major airlines and using illegal kickbacks for personal use. On top of a three-year prison sentence for a separate tax fraud case, his plea Tuesday calls for a nearly five-year sentence.

Kelly pleaded guilty to rigging bids to steer $8.5 million in inflated contracts for roofing work done on American Airlines and United Airline facilities at O’Hare International Airport between 1998 and 2006. The scheme benefited BCI Commercial Roofing Inc. in Markham, of which he is president and owner.

About $1 million of the kickbacks went to repay gambling debts and a home loan, according to the plea. Some of the kickbacks also went to entities associated with Tony Rezko.

Kelly originally was charged with 11 counts of mail fraud and six counts of money laundering for the scheme.

• His December 2007 indictment charged him with using corporate funds from his roofing and consulting firms to pay illegal gambling debt. He received three years in prison for those charges.
• His February 2009 indictment includes the O’Hare kickback scheme. His plea seeks nearly 4.5 years more on two counts of mail fraud.
• He still faced trial for his involvement in Blagojevich’s ongoing corruption case, scheduled for court June 2010. That indictment is here.

Chris Kelly indicted again

Christopher Kelly, a former campaign manager to former Gov. Rod Blagojevich, received another federal indictment today, this time alleging he rigged roofing contracts with two major airlines to pay for gambling debts and a house, among other things.

We wrote about him a little more than a year ago, when his first indictment said he used corporate funds from his roofing and consulting firms to pay illegal gambling debt and bookies.

The most recent indictment says he allegedly funneled more than $1.18 million in proceeds from fraudulent contracts (see U.S. Attorney Patrick Fitzgerald's news release here). He’s the president and owner of a roofing firm, which allegedly rigged bids to steer $8.5 million in “inflated contracts” for roofing work done on American Airlines and United Airlines facilities at O’Hare International Airport. The scheme allegedly helped Kelly pay $383,000 in personal gambling debts, $700,000 for a personal loan to buy a house and $40,000 in personal expenses. The scheme also granted $450,000 to a president of the consulting firm allegedly involved in the activities.

Kelly was charged with 11 counts of mail fraud and six counts of money laundering. Each count carries a maximum penalty of 20 years in prison and a $250,000 fine. The feds also are seeking the $1.18 million involved in the money laundering counts, $1.6 million involved in the contract fraud, as well as Kelly’s Burr Ridge house. He’ll be arraigned at a later date.

Operation Board Game snags another piece

The U.S. attorney’s office in Northern Illinois is advancing its way around Gov. Rod Blagojevich’s inner circle, and Thursday’s indictment of GOP political bigwig William Cellini could be just another attempt to recruit one more person to testify against the governor, says Kent Redfield, political scientist with the University of Illinois at Springfield.

U.S. Attorney Patrick Fitzgerald indicted Cellini today on four charges of federal corruption. The 21-page indictment spells out a classic pay-to-play scheme of trading political campaign cash for state business. But Cellini’s attorney, Dan Webb of Winston & Strawn in Chicago, already combats the charges as “unfair and unjust” and based on shaky evidence.

The feds allege that Cellini was one of many people who conspired to rig state boards to hire investment firms that would, among other financial benefits, donate to the political campaign of Public Official A, previously identified as Blagojevich. The scheme allegedly happened between spring 2003 and summer 2005. Other conspirators already charged include Blagojevich insider Tony Rezko, former state board member Stuart Levine, attorneys Joseph Cari and Steven Loren and construction contractor Jacob Kiferbaum. Cellini’s indictment lists two more: Co-Conspirator A and a Teachers Retirement System Staffer A, yet to officially be identified. Co-Conspirator A is widely thought to be Christopher Kelly, who already was indicted on separate charges of tax fraud.

Cellini’s indictment alleges that he participated in a scheme to pressure Chicago businessman Thomas Rosenberg to give money to Blagojevich’s political campaign. The alleged ultimatum was that Rosenberg’s company, Capri Capital, had to raise money or donate to Blagojevich’s political fund to get a $220 million business deal with the Teachers’ Retirement System. The system oversees and handles investments for public pensions of teachers and administrators outside of Chicago. Private investment firms handle TRS assets. Through a statement, TRS administrators declined to comment but said the staff will “continue to uphold their fiduciary duty to our participants.”

According to Cellini’s indictment, the schemers decided it was too risky to continue pressuring Rosenberg when he threatened to go to authorities. But after that, Cellini, Rezko and others “discussed the possibility of removing the U.S. attorney for the Northern District of Illinois in an effort to stop any investigations into the co-conspirators and others,” according to the indictment.

Webb’s statement describes Cellini as “completely innocent of these charges, and he will fight this case because he has done absolutely nothing wrong.” It highlights the point that while a grand jury found Rezko guilty of 16 counts of corruption, they found him not guilty on one of the most serious charges of attempted extortion, relating to the charges involving Rosenberg. It states that Rosenberg testified in Rezko’s trial that “Bill Cellini never asked him for any money and that Rosenberg never paid any money to Cellini or anyone else.”

Redfield says if the assumption is that the U.S. attorney’s ultimate goal is to get all the way to Blagojevich, indicting Cellini makes sense. But there's no guarantee it'll work.

“At this point, Cellini thinks that this is not a slam dunk,” says Redfield. “And he’s willing to be indicted rather than to cooperate.”

And if the federal grand jury agrees with prosecutors’ assessment of Cellini’s involvement in the scheme, why would a successful, wealthy political insider at all levels of government work to secure funds on behalf of Blagojevich, a Democratic governor? Redfield says it’s all about power. “I don’t think it was so much about fighting for the governor as it was about power in the board and playing the game. He was as mover and shaker when [Jim] Thompson, [Jim] Edgar and [George] Ryan were governors. That’s what he knows and what he does … Power is addictive.”

Inner circle

A federal investigation stung another member of Gov. Rod Blagojevich’s inner circle without mentioning the governor. Christopher Kelly, the governor’s close friend, former campaign manager and early advisor on gaming issues, was federally indicted for tax fraud by allegedly hiding more than $1 million of income over five years. The indictment says he used corporate funds from his roofing and consulting firms to pay illegal gambling debt and bookies.

The governor issued a statement: “Chris Kelly is my friend. I am saddened to hear these allegations about Chris's personal life. I know the pain it must be causing him and his family. My thoughts and my prayers are with them during this difficult time. In fairness to Chris, I believe it is important to let the legal process play out and not rush to judgment.”

Kelly’s indictment was coupled with an expansion of a separate investigation that indicted Antoin “Tony” Rezko, Blagojevich fundraiser and businessman, in October 2006. Rezko pleaded not guilty to allegations that he received kickbacks and illegal fees from investment firms seeking business with the state.

Former corrections chief and contractors indicted

BY BETHANY CARSON

Donald Snyder Jr., former director of the Illinois Department of Corrections, was indicted on federal charges of receiving about $50,000 in illegal kickbacks from two lobbyists who represented health-care companies holding large contracts with the state. The indictments stem from a federal investigation, “Operation Safe Road,” that led to the corruption conviction of former Gov. George Ryan. The former governor appointed Snyder, of Pittsfield, to his post that ran from 1999 to 2003.

“As a top state official, Mr. Snyder was bound by various rules governing his acceptance of gifts or favors of any kind,” said U.S. attorney Patrick Fitzgerald in a press release. “He was forbidden from receiving cash kickbacks from anyone, much less from lobbyists representing companies doing millions of dollars in business with IDOC.”

Lobbyist John Robinson of Barrington Hills in northern Illinois represented an Illinois-based company that held a multi-million dollar contract with the state to provide health-care services for Illinois inmates. He also is the former Cook County undersheriff. Between 1996 and 2003, he allegedly arranged a contract with the health-care company to receive $2,500 a month in addition to 5 percent of the company’s income from contracts with the Department of Corrections. The indictment says Robinson expected to get an increased payment of $4,500 a month as soon as the health-care company’s state contract exceeded $4 million.

Larry Sims of Pleasant Plains in central Illinois, represented a Pennsylvania health-care company that also held multi-million dollar contracts with the corrections department. He allegedly co-schemed with Snyder and Robinson to file false statements with the state to hide the illegal payments to Snyder.

Snyder and Robinson were each charged with five counts of mail fraud, one carrying a maximum sentence of one year in prison and four others carrying up to 20 years in prison. Sims was charged with one count of perjury for allegedly lying to a grand jury during the investigation, an offense carrying a maximum punishment of five years in prison. The indictment also seeks $50,000 from Snyder. If convicted, all three also could have to pay a $250,000 fine on each count.

Zip, zero, zilch

By Deanese Williams-Harris
Not a single representative voted to support Gov. Rod Blagojevich’s proposed gross receipts tax, the crux of his spending plans for next year. Signs saying, “No means no, Governor,” were taped to the desks as the House voted on a nonbinding resolution asking whether members were for or against the tax plan. Zero voted in support, 107 voted against and seven voted present.

A silent observer was Sen. James Meeks, the Chicago Democrat co-sponsoring an alternative tax plan, HB 750, with Rep. David Miller, a Lynwood Democrat. It would swap higher income taxes and sales taxes for lower property taxes. Miller said the vote was a sign that members are willing to look at a different revenue source to fund education and to meet the state’s current obligations. “The GRT concept has been defeated today,” he said. “We need to look at an alternative plan, and I believe that plan is 750.”

As Blagojevich said Thursday, however, he would veto any increase in income or sales taxes as called for in 750. Miller didn’t seem too concerned because he said lawmakers could override the governor’s veto if they gained enough votes.

Before the House took the vote, Blagojevich issued a statement urging them to vote against the GRT resolution. “Considering that this meaningful dialogue was initiated just 24 hours ago, it would be premature to conclude the discussion today and ask members to make a decision before they have an opportunity to get answers to their questions and offer their ideas,” Blagojevich said. “So we are asking all members to vote ‘no’ to send a clear message that this issue is too important for a rush to judgment on a non-binding resolution.”

Abby Ottenhoff, a governor’s spokeswoman, said she wasn’t surprised by today’s outcome. “It isn’t a true reflection of what the long-term outcome will be,” she said. Regarding the questions House members asked during Wednesday’s special committee on the GRT, Ottenhoff said the governor’s office expects to have written answers ready in a few days.

Feds tag another kickback
By Bethany Carson
Former Chicago Ald. Edward Vrdolyak was indicted on federal fraud charges for allegedly scheming with one of Gov. Rod Blagojevich’s appointees, Chicago businessman Stuart Levine. The two allegedly worked in “behind-the-scenes manipulation” to pad their own pockets at the expense of the Chicago Medical School, according to a release from U.S. Attorney Patrick Fitzgerald’s office.

Levine already pleaded guilty last fall and is working with the feds in an ongoing investigation called “Operation Board Games.” The governor’s chief fund-raiser, Tony Rezko, also was indicted and pleaded not guilty in the same investigation. You can read more in my October 2006 blogs and about Operation Board Games here.

Vrdolyak’s indictment says he worked with Levine between 2002 and 2006 to steer a contract involving property owned by the Chicago Medical School, where Levine sat on the board of trustees. The alleged scheme was that Vrdolyak, an attorney, would solicit a certain Chicago real estate company, Smithfield Properties Development, to turn the medical school’s property into condominiums. And Levine would use his political influence on the medical school board to ensure the job was given to Smithfield. The deal would result in a $1.5 million payment to Vrdolyak once the condos were finished, and Vrdolyak would give a chunk to Levine. They never got their money, the prosecutor’s office says, because the condos aren’t finished and the investigation got in the way.

If convicted, Vrdolyak would face a maximum 20 years in prison for each count of mail fraud and wire fraud and another 10 years for one count of bribery. He was charged with four counts total. He’ll be arraigned in Chicago at a later date.

Breathe

Many journalists held their breaths today as they waited to hear how close a federal investigation of state contracting schemes would come to Gov. Rod Blagojevich. In a Chicago federal court building this afternoon, one of the governor’s appointees, Stuart Levine, pleaded guilty to mail fraud and money laundering.

Levine, a significant GOP fund-raiser, was appointed by former Gov. George Ryan to sit on two regulatory boards, the Teachers Retirement System, which pays the pensions of teachers outside of Chicago, and the Health Facilities Planning Board, which oversees construction projects of hospitals and other medical buildings. He was originally appointed to the planning board during Gov. Jim Edgar’s Administration and was reappointed by Ryan, then Blagojevich.

Levine’s plea agreement lays out details of an intricate scheme described in the indictment of Levine and Antoin “Tony” Rezko, Blagojevich's political advisor (see more on our news page). Levine worked with at least five others in schemes between 2001 and 2004.

The details are many, but, alas, reporters see only a slew of unnamed individuals — A through L and investment firms 1 through 9. By using code names, prosecutors haven’t yet tipped their hands on how close the schemes come to the governor’s inner circle.

Levine has been cooperating with the feds for months, which could reduce his sentence, and he won’t be sentenced until the ongoing investigation concludes.

There are a lot of people involved, and a lot more details will rain down before it’s all over. In short, reporters aren’t the only ones holding their breaths this fall.

Rezko repercussions

In the aftermath of a long-rumored federal indictment of Antoin “Tony” Rezko this week (see our Illinois Issues news item), Gov. Rod Blagojevich is being asked to answer questions about his chief fundraiser, advisor and friend.

Federal prosecutors announced Rezko’s two indictments (see 1 and 2) Wednesday afternoon, detailing pay-to-pay schemes with at least five others who allegedly used their positions on public boards to pressure investment firms into paying illegal fees and making political contributions.

The governor responded in a press conference Wednesday night, streamed live on the Internet. Blagojevich said, “On a personal level, what is so disappointing to me and so surprising to me is that he would engage in a criminal conspiracy to personally enrich himself, and do that behind our backs and then repeatedly deceive us, deceive me, lie to us and reassure us that the rumors about him weren’t true.” He also said he would donate about $60,000 to $70,000 of Rezko’s direct campaign contributions to charity.

Meanwhile, candidates for Illinois' legislative seats and statewide offices are jumping at the chance to claim their righteousness this election season.

The Republican gubernatorial candidate, three-term state Treasurer Judy Baar Topinka, stopped by the Capitol Thursday with her running mate, DuPage County state’s attorney Joe Birkett, to say the governor should answer questions about the gifts he received from Rezko. She also touted her ethics plan.

“Things do not have to be this way,” Topinka said. “We can have good, honest government in Illinois. There’s no reason why Illinois has to be different from other states on that front. I just want to be a governor who will do a good job and do the right thing.”