Blagojevich fundraiser, adviser indicted in corruption investigation
Following the well-worn path it has taken to the heights of Illinois government before, the U.S. Attorney's office took another step up the ladder in Gov. Rod Blagojevich's kitchen cabinet Thursday, indicting his trusted fundraiser and point man on gambling, Christopher Kelly.
A grand jury also added six new charges in a separate case against another former Blagojevich fundraiser, Antoin "Tony" Rezko of Wilmette, and charged one of Rezko's business partners, Abdelhamid "Al" Chaib, 53, of LaGrange Park -- possibly ramping up the pressure on them to tell investigators what they know.
The string of indictments are the latest blow to Blagojevich -- a self-proclaimed government reformer -- in an ongoing investigation of allegations his administration abused power and exchanged appointments and contracts for campaign cash.
Blagojevich has not been charged with any wrongdoing, and the indictment announced Thursday deals with Kelly's personal finances, not his activities in government.
The indictment alleges Kelly, 49, of Burr Ridge, "placed millions of dollars of wagers with" an illegal Illinois bookmaking operation between 2000 and 2006.
During that time period, Kelly also was serving as Blagojevich's emissary to the Illinois Gaming Board and pressuring that independent body to accept a casino in Rosemont after one was derailed for having mob-tied investors.
Blagojevich told the Chicago Sun-Times in 2003 he had picked Kelly because "he understands that industry … He goes to Vegas. He likes all of that."
Jim Wagner, a former FBI agent and mob expert who now heads the Chicago Crime Commission, said the history of the mob shows any illegal betting operation of significant size inevitably gets taken over by the mob or pays it a percentage.
In all, U.S. Attorney Patrick Fitzgerald alleged that Kelly underreported $1 million in personal income and $300,000 in income to businesses he controlled: BCI Commercial Roofing Inc. and CGK Consulting Inc.
Michael Monico, Kelly's lawyer, stressed that all the charges have to do with Kelly's personal and business finances. "They have absolutely nothing to do with his fundraising activity," Monico said.
"At the end of the day when all the evidence is in, the government will see, as will everyone else, that Mr. Kelly owes no taxes -- there will be no tax due and owing from Mr. Kelly," Monico said.
Kelly was charged with five counts each of filing false federal income tax returns and filing false corporate tax returns, one count of obstructing or impeding the Internal Revenue Service, and one count of illegally structuring monetary transactions.
The governor's office did not return phone calls Thursday, but released a statement on the indictment.
"Chris Kelly is my friend," said Blagojevich's statement. "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."
The statement said nothing about Rezko's new charges.
Blagojevich has also long stood by Kelly, even when Chicago Alderman Dick Mell -- the governor's father-in-law -- accused Kelly of trading state appointments for campaign cash -- a charge Mell later recanted.
Kelly was tied last year by federal authorities to Tony Rezko's indictment on charges of swapping campaign cash for lucrative investment deals with state teacher pension money. Rezko is slated to go to trial on that case Feb. 25.
Rezko was a major fundraiser for the governor and played a role in picking associates for top state jobs.
The new charges against Chaib and Rezko allege a scheme to inflate the value of Rezko's Papa John's pizza restaurants so they could obtain loans on the stores. The former head of the Illinois Finance Authority, Ali Ata of Lemont, was previously indicted in the scheme. Prosecutors claimed he used state letterhead to assure lenders the state intended to guarantee the loans, which was untrue.
Rezko also owned a construction contracting company that managed work on the governor's personal Chicago home. Chaib owns Subways at state-controlled tollway oases.
Kelly's indictment noted that one of the ways he made payments on his gambling debts was through third parties, in some instances from two separate pizza companies. Fitzgerald would not say which pizza companies.
And in yet another indictment released Thursday, the government announced that it was re-indicting P. Nicholas Hurtgen, 44, of Glencoe, of Bear Stearns & Co., alleging he aided and abetted another Blagojevich fundraiser, Stuart Levine, in soliciting kickbacks for Levine when he served on the state's Health Facilities Planning Board. Levine has pleaded guilty in that case and is cooperating with the government.
He admitted to shaking down Edward Hospital executives, telling them through intermediaries that if they didn't use Kiferbaum Construction Co., they would not receive permission to open a new facility.
"Hurtgen told the CEO that Levine and (Jacob) Kiferbaum were friends and that Levine had a close relationship with a high-ranking Illinois elected official, Public Official A, who also liked Kiferbaum. Hurtgen told the CEO that … the support for Public Official A and those surrounding (him) was 'all about money' for political campaigns," Hurtgen's indictment alleges.
The U.S. attorney would not comment on who "Public Official A" might be.
Charges against Hurtgen were thrown out before but can be revived because the prohibition against double jeopardy kicks in only once a trial starts. Hurtgen's charges were dismissed before trial.
"The judge threw the indictment out the first time and I do not believe the deficiencies in the indictment have been remedied, largely because the facts don't support a charge against Nick," said Ron Safer, Hurtgen's lawyer.