Levine describes damage control efforts when extortion failed

Tommy Rosenberg had had enough.

After trying unsuccessfully to work his way through back channels to get approval for his company to invest $220 million of state teachers' money, Rosenberg - an owner of Capri Capital - was being skillfully directed, time and time again, to deal with con man Stuart Levine, Levine testified Thursday.

Levine was a member of the Teachers Retirement System, a state board that invested teachers' pension money. He testified he had deliberately held up Rosenberg's application. He held it up at first because he was angry with Rosenberg for not paying him a bribe for a 2001 Capri investment with the board, but then the application was being held up because defendant Antoin "Tony" Rezko learned how much business Rosenberg was doing with TRS.

At that amount - almost $1 billion - both Rezko and another insider, Chris Kelly, felt Rosenberg should be donating to Gov. Rod Blagojevich's campaign.

Rezko and Kelly were Blagojevich's main fundraisers and were responsible for most appointments to state boards, Levine has testified.

"If Tom feels he would rather walk away from the money than deal with Tony (Rezko through me), then there it is," Levine said on tape to fellow power broker Bill Cellini on May 7, 2004.

Neither Cellini nor Levine knew they were being recorded by federal investigators, of course.

Had they known, they might not have so candidly discussed their maneuvering to make Rosenberg pay for the privilege of doing business with the state.

But they didn't know, so they persisted in making clear to Rosenberg, through Cellini, that Rosenberg's application was being held up because Rezko and Kelly thought he should make some political contributions if he wanted both to retain his current business and get more state business, Levine testified.

But Rosenberg balked.

Cellini, in a subsequent phone call to Levine, told Levine that Rosenberg was threatening to go to the feds.

"'I don't have a problem,'" Cellini, caught on tape, quoted Rosenberg as saying. "'They have a problem. I'll take them down. … if they're going to blackmail me.' … He went on and on."

"'Whoever you were talking to, by God, let 'em know they got a problem,'" the tape recording of Cellini quotes Rosenberg as saying.

"He's a bad guy, Tommy (Rosenberg)," Levine responds to Cellini on the tape. "But the fact of the matter is he's not entitled (to state business without a campaign contribution). He shouldn't get an allocation (of teachers pension money)."

But Cellini, who says on one of the tapes that Rosenberg's talk of federal investigators being interested in Kelly and Rezko "scared the (expletive) out of me," cautions Levine about being so blatant in turning Rosenberg down.

"We don't want to play chicken with him, though," Cellini says on the tape. "He (Rosenberg) said, 'I'll call the governor. I'll call whoever I have to call. I'll bring them down.'"

Cellini then suggest to Levine on the tape that instead of turning Rosenberg down altogether, they instead give him state business, but for an insignificant amount.

"That's a good idea," Levine responds.

Eventually, Levine has testified, Rezko and Levine decided to give Capri its full investment, but vowed not to let Rosenberg have business in the future.

Prosecutors may finish with Levine today. It will then be Rezko attorney Joseph Duffy's turn to ask Levine questions. The cross-exam is expected to be a withering dissection of Levine, an admitted extortionist and drug abuser.

"Wait 'til I cross examine him," Duffy said to jurors during his opening statements almost a month ago.