Fed's Release re: Blagojevich Arrest, Federal Corruption Charges

ILLINOIS GOV. ROD R. BLAGOJEVICH AND HIS CHIEF OF STAFF JOHN HARRIS
ARRESTED ON FEDERAL CORRUPTION CHARGES

Blagojevich and aide allegedly conspired to sell U.S. Senate
appointment, engaged in “pay-to-play” schemes and threatened to
withhold state assistance to Tribune Company for Wrigley Field to
induce purge of newspaper editorial writers

CHICAGO – Illinois Gov. Rod R. Blagojevich and his Chief of Staff,
John Harris, were arrested today by FBI agents on federal corruption
charges alleging that they and others are engaging in ongoing
criminal activity: conspiring to obtain personal financial benefits
for Blagojevich by leveraging his sole authority to appoint a United
States Senator; threatening to withhold substantial state assistance
to the Tribune Company in connection with the sale of Wrigley Field
to induce the firing of Chicago Tribune editorial board members
sharply critical of Blagojevich; and to obtain campaign contributions
in exchange for official actions – both historically and now in a
push before a new state ethics law takes effect January 1, 2009.

Blagojevich, 51, and Harris, 46, both of Chicago, were each charged
with conspiracy to commit mail and wire fraud and solicitation of
bribery. They were charged in a two-count criminal complaint that was
sworn out on Sunday and unsealed today following their arrests, which
occurred without incident, announced Patrick J. Fitzgerald, United
States Attorney for the Northern District of Illinois, and Robert D.
Grant, Special Agent-in-Charge of the Chicago Office of the Federal
Bureau of Investigation. Both men were expected to appear later today
before U.S. Magistrate Judge Nan Nolan in U.S. District Court in
Chicago.

A 76-page FBI affidavit alleges that Blagojevich was intercepted on
court-authorized wiretaps during the last month conspiring to sell or
trade Illinois’ U.S. Senate seat vacated by President-elect Barack
Obama for financial and other personal benefits for himself and his
wife. At various times, in exchange for the Senate appointment,
Blagojevich discussed obtaining:

* A substantial salary for himself at a either a non-profit
foundation or an organization affiliated with labor unions;
* Placing his wife on paid corporate boards where he speculated
she might garner as much as $150,000 a year;
* Promises of campaign funds – including cash up front; and
* A cabinet post or ambassadorship for himself.

Just last week, on December 4, Blagojevich allegedly told an advisor
that he might “get some (money) up front, maybe” from Senate
Candidate 5, if he named Senate Candidate 5 to the Senate seat, to
insure that Senate Candidate 5 kept a promise about raising money for
Blagojevich if he ran for re-election. In a recorded conversation on
October 31, Blagojevich described an earlier approach by an associate
of Senate Candidate 5 as follows: “We were approached ‘pay to play.’
That, you know, he’d raise 500 grand. An emissary came. Then the
other guy would raise a million, if I made him (Senate Candidate 5) a
Senator.”

On November 7, Blagojevich said he needed to consider his family and
that he is “financially” hurting while talking on the phone about the
Senate seat with Harris and an advisor, the affidavit states. Harris
allegedly said that they were considering what would help the
“financial security” of the Blagojevich family and what will keep
Blagojevich “politically viable.” Blagojevich stated, “I want to make
money,” adding later that he is interested in making $250,000 to
$300,000 a year, the complaint alleges.

On November 10, in a lengthy telephone call with numerous advisors
that included discussion about Blagojevich obtaining a lucrative job
with a union-affiliated organization in exchange for appointing a
particular Senate Candidate whom he believed was favored by the
President-elect and which is described in more detail below,
Blagojevich and others discussed various ways Blagojevich could
“monetize” the relationships he has made as governor to make money
after leaving that office.

“The breadth of corruption laid out in these charges is staggering,”
Mr. Fitzgerald said. “They allege that Blagojevich put a ‘for sale’
sign on the naming of a United States Senator; involved himself
personally in pay-to-play schemes with the urgency of a salesman
meeting his annual sales target; and corruptly used his office in an
effort to trample editorial voices of criticism. The citizens of
Illinois deserve public officials who act solely in the public’s
interest, without putting a price tag on government appointments,
contracts and decisions,” he added.

Mr. Grant said: “Many, including myself, thought that the recent
conviction of former governor would usher in a new era of honesty and
reform in Illinois politics. Clearly, the charges announced today
reveal that the office of the Governor has become nothing more than a
vehicle for self-enrichment, unrestricted by party affiliation and
taking Illinois politics to a new low.”

Mr. Fitzgerald and Mr. Grant thanked the Chicago offices of the
Internal Revenue Service Criminal Investigation Division, the U.S.
Postal Inspection Service and the U.S. Department of Labor Office of
Inspector General for assisting in the ongoing investigation. The
probe is part of Operation Board Games, a five-year-old public
corruption investigation of pay-to-play schemes, including insider-
dealing, influence-peddling and kickbacks involving private interests
and public duties.

Federal agents today also executed search warrants at the offices of
Friends of Blagojevich located at 4147 North Ravenswood, Suite 300,
and at the Thompson Center office of Deputy Governor A.

Pay-to-Play Schemes

The charges include historical allegations that Blagojevich and
Harris schemed with others – including previously convicted
defendants Antoin Rezko, Stuart Levine, Ali Ata and others – since
becoming governor in 2002 to obtain and attempt to obtain financial
benefits for himself, his family and third parties, including his
campaign committee, Friends of Blagojevich, in exchange for
appointments to state boards and commissions, state employment, state
contracts and access to state funds. A portion of the affidavit
recounts the testimony of various witnesses at Rezko’s trial earlier
this year.

The charges focus, however, on events since October when the
Government obtained information that Blagojevich and Fundraiser A,
who is chairman of Friends of Blagojevich, were accelerating
Blagojevich’s allegedly corrupt fund-raising activities to accumulate
as much money as possible this year before a new state ethics law
would severely curtail Blagojevich’s ability to raise money from
individuals and entities that have existing contracts worth more than
$50,000 with the State of Illinois. Agents learned that Blagojevich
was seeking approximately $2.5 million in campaign contributions by
the end of the year, principally from or through individuals or
entities – many of which have received state contacts or appointments
– identified on a list maintained by Friends of Blagojevich, which
the FBI has obtained.

The affidavit details multiple incidents involving efforts by
Blagojevich to obtain campaign contributions in connection with
official actions as governor, including these three in early October:

* After an October 6 meeting with Harris and Individuals A and
B, during which Individual B sought state help with a business
venture, Blagojevich told Individual A to approach Individual B about
raising $100,000 for Friends of Blagojevich this year. Individual A
said he later learned that Blagojevich reached out directly to
Individual B to ask about holding a fund-raiser;
* Also on October 6, Blagojevich told Individual A that he
expected Highway Contractor 1 to raise $500,000 in contributions and
that he was willing to commit additional state money to a Tollway
project – beyond $1.8 billion that Blagojevich announced on October15
– but was waiting to see how much money the contractor raised for
Friends of Blagojevich; and
* On October 8, Blagojevich told Individual A that he wanted to
obtain a $50,000 contribution from Hospital Executive 1, the chief
executive officer of Children’s Memorial Hospital in Chicago, which
had recently received a commitment of $8 million in state funds. When
the contribution was not forthcoming, Blagojevich discussed with
Deputy Governor A the feasibility of rescinding the funding.

On October 21, the Government obtained a court order authorizing the
interception of conversations in both a personal office and a
conference room used by Blagojevich at the offices of Friends of
Blagojevich. The FBI began intercepting conversations in those rooms
on the morning of October 22. A second court order was obtained last
month allowing those interceptions to continue. On October 29, a
court order was signed authorizing the interception of conversations
on a hardline telephone used by Blagojevich at his home. That wiretap
was extended for 30 days on November 26, according to the affidavit.

Another alleged example of a pay-to-play scheme was captured in
separate telephone conversations that Blagojevich had with Fundraiser
A on November 13 and Lobbyist 1 on December 3. Lobbyist 1 was
reporting to Blagojevich about his efforts to collect a contribution
from Contributor 1 and related that he “got in his face” to make it
clear to Contributor 1 that a commitment to make a campaign
contribution had to be done now, before there could be some
skittishness over the timing of the contribution and Blagojevich
signing a bill that would benefit Contributor 1. Blagojevich
commented to Lobbyist 1 “good” and “good job.” The bill in question,
which is awaiting Blagojevich ’s signature, is believed to be
legislation that directs a percentage of casino revenue to the horse
racing industry.

Sale of U.S. Senate Appointment

Regarding the Senate seat, the charges allege that Blagojevich,
Harris and others have engaged and are engaging in efforts to obtain
personal gain, including financial gain, to benefit Blagojevich and
his family through corruptly using Blagojevich’s sole authority to
appoint a successor to the unexpired term of the President-elect’s
former Senate seat, which he resigned effective November 16. The
affidavit details numerous conversations about the Senate seat
between November 3 and December 5. In these conversations,
Blagojevich repeatedly discussed the attributes of potential
candidates, including their abilities to benefit the people of
Illinois, and the financial and political benefits he and his wife
could receive if he appointed various of the possible candidates.

Throughout the intercepted conversations, Blagojevich also allegedly
spent significant time weighing the option of appointing himself to
the open Senate seat and expressed a variety of reasons for doing so,
including: frustration at being “stuck” as governor; a belief that he
will be able to obtain greater resources if he is indicted as a
sitting Senator as opposed to a sitting governor; a desire to remake
his image in consideration of a possible run for President in 2016;
avoiding impeachment by the Illinois legislature; making corporate
contacts that would be of value to him after leaving public office;
facilitating his wife’s employment as a lobbyist; and generating
speaking fees should he decide to leave public office.

In the earliest intercepted conversation about the Senate seat
described in the affidavit, Blagojevich told Deputy Governor A on
November 3 that if he is not going to get anything of value for the
open seat, then he will take it for himself: “if . . . they’re not
going to offer anything of any value, then I might just take it.”
Later that day, speaking to Advisor A, Blagojevich said: “I’m going
to keep this Senate option for me a real possibility, you know, and
therefore I can drive a hard bargain.” He added later that the seat
“is a [expletive] valuable thing, you just don’t give it away for
nothing.”

Over the next couple of days – Election Day and the day after –
Blagojevich was captured discussing with Deputy Governor A whether he
could obtain a cabinet position, such as Secretary of Health and
Human Services or the Department of Energy or various
ambassadorships. In a conversation with Harris on November 4,
Blagojevich analogized his situation to that of a sports agent
shopping a potential free agent to the highest bidder. The day after
the election, Harris allegedly suggested to Blagojevich that the
President-elect could make him the head of a private foundation.

Later on November 5, Blagojevich said to Advisor A, “I’ve got this
thing and it’s [expletive] golden, and, uh, uh, I’m just not giving
it up for [expletive] nothing. I’m not gonna do it. And, and I can
always use it. I can parachute me there,” the affidavit states.

Two days later, in a three-way call with Harris and Advisor B, a
consultant in Washington, Blagojevich and the others allegedly
discussed the prospect of a three-way deal for the Senate appointment
involving an organization called “Change to Win,” which is affiliated
with various unions including the Service Employees International
Union (SEIU).

On November 10, Blagojevich, his wife, Harris, Governor General
Counsel, Advisor B and other Washington-based advisors participated
at different times in a two-hour phone call in which they allegedly
discussed, among other things, a deal involving the SEIU. Harris said
they could work out a deal with the union and the President-elect
where SEIU could help the President-elect with Blagojevich’s
appointment of Senate Candidate 1, while Blagojevich would obtain a
position as the National Director of the Change to Win campaign and
SEIU would get something favorable from the President-elect in the
future. Also during that call, Blagojevich agreed it was unlikely
that the President-elect would name him Secretary of Health and Human
Services or give him an ambassadorship because of all of the negative
publicity surrounding him.

In a conversation with Harris on November 11, the charges state,
Blagojevich said he knew that the President-elect wanted Senate
Candidate 1 for the open seat but “they’re not willing to give me
anything except appreciation. [Expletive] them.” Earlier in that
conversation, Blagojevich suggested starting a 501(c)(4) non-profit
organization, which he could head and engage in political activity
and lobbying. In that conversation with Harris and other discussions
with him and others over the next couple of days, Blagojevich
suggested by name several well-known, wealthy individuals who could
be prevailed upon to seed such an organization with $10-$15 million,
and suggesting that he could take the organization’s reins when he is
no longer governor, according to the affidavit.

On November 12, Blagojevich spoke with SEIU Official who was in
Washington. This conversation occurred about a week after Blagojevich
had met with SEIU Official to discuss the Senate seat, with the
understanding that the union official was an emissary to discuss
Senate Candidate 1's interest in the Senate seat. During the November
12 conversation, Blagojevich allegedly explained the non-profit
organization idea to SEIU Official and said that it could help Senate
Candidate 1. The union official agreed to “put that flag up and see
where it goes,” although the official also had said he wasn’t certain
if Senate Candidate 1 wanted the official to keep pushing her
candidacy. Senate Candidate 1 eventually removed herself from
consideration for the open seat.

Also on November 12, in a conversation with Harris, the complaint
affidavit states, Blagojevich said his decision about the open Senate
seat will be based on three criteria in the following order of
importance: “our legal situation, our personal situation, my
political situation. This decision, like every other one, needs to be
based upon that. Legal. Personal. Political.” Harris said: “legal is
the hardest one to satisfy.” Blagojevich said that his legal problems
could be solved by naming himself to the Senate seat.

As recently as December 4, in separate conversations with Advisor B
and Fundraiser A, Blagojevich said that he was “elevating” Senate
Candidate 5 on the list of candidates because, among other reasons,
if Blagojevich ran for re-election, Senate Candidate 5 would “raise
[] money” for him. Blagojevich said that he might be able to cut a
deal with Senate Candidate 5 that provided Blagojevich with something
“tangible up front.” Noting that he was going to meet with Senate
Candidate 5 in the next few days, Blagojevich told Fundraiser A to
reach out to an intermediary (Individual D), from whom Blagojevich is
attempting to obtain campaign contributions and who Blagojevich
believes is close to Senate Candidate 5. Blagojevich told Fundraiser
A to tell Individual D that Senate Candidate 5 was a very realistic
candidate but Blagojevich was getting a lot of pressure not to
appoint Senate Candidate 5, according to the affidavit.

Blagojevich allegedly told Fundraiser A to tell Individual D that if
Senate Candidate 5 is going to be chosen, “some of this stuff’s gotta
start happening now . . . right now . . . and we gotta see it.”
Blagojevich continued, “You gotta be careful how you express that and
assume everybody’s listening, the whole world is listening. You hear
me?” Blagojevich further directed Fundraiser A to talk to Individual
D in person, not by phone, and to communicate the “urgency” of the
situation.

Blagojevich spoke to Fundraiser A again the next day, December 5, and
discussed that day’s Chicago Tribune front page article stating that
Blagojevich had recently been surreptitiously recorded as part of the
ongoing criminal investigation. Blagojevich instructed Fundraiser A
to “undo your [Individual D] thing,” and Fundraiser A confirmed it
would be undone, the complaint alleges.

Also on December 5, Blagojevich and three others allegedly discussed
whether to move money out of the Friends of Blagojevich campaign fund
to avoid having the money frozen by federal authorities and also
considered the possibility of prepaying the money to Blagojevich’s
criminal defense attorney with an understanding that the attorney
would donate the money back at a later time if it was not needed.
They also discussed opening a new fund raising account named Citizens
for Blagojevich with new contributions.

Misuse of State Funding To Induce Firing of Chicago Tribune Editorial
Writers

According to the affidavit, intercepted phone calls revealed that the
Tribune Company, which owns the Chicago Tribune and the Chicago Cubs,
has explored the possibility of obtaining assistance from the
Illinois Finance Authority (IFA) relating to the Tribune Company’s
efforts to sell the Cubs and the financing or sale of Wrigley Field.
In a November 6 phone call, Harris explained to Blagojevich that the
deal the Tribune Company was trying to get through the IFA was
basically a tax mitigation scheme in which the IFA would own title to
Wrigley Field and the Tribune would not have to pay capital gains
tax, which Harris estimated would save the company approximately $100
million.

Intercepted calls allegedly show that Blagojevich directed Harris to
inform Tribune Owner and an associate, identified as Tribune
Financial Advisor, that state financial assistance would be withheld
unless members of the Chicago Tribune’s editorial board were fired,
primarily because Blagojevich viewed them as driving discussion of
his possible impeachment. In a November 4 phone call, Blagojevich
allegedly told Harris that he should say to Tribune Financial
Advisor, Cubs Chairman and Tribune Owner, “our recommendation is fire
all those [expletive] people, get ‘em the [expletive] out of there
and get us some editorial support.”

On November 6, the day of a Tribune editorial critical of
Blagojevich, Harris told Blagojevich that he told Tribune Financial
Advisor the previous day that things “look like they could move ahead
fine but, you know, there is a risk that all of this is going to get
derailed by your own editorial page.” Harris also told Blagojevich
that he was meeting with Tribune Financial Advisor on November 10.

In a November 11 intercepted call, Harris allegedly told Blagojevich
that Tribune Financial Advisor talked to Tribune Owner and Tribune
Owner “got the message and is very sensitive to the issue.” Harris
told Blagojevich that according to Tribune Financial Advisor, there
would be “certain corporate reorganizations and budget cuts coming
and, reading between the lines, he’s going after that section.”
Blagojevich allegedly responded. “Oh. That’s fantastic.” After
further discussion, Blagojevich said, “Wow. Okay, keep our fingers
crossed. You’re the man. Good job, John.”

In a further conversation on November 21, Harris told Blagojevich
that he had singled out to Tribune Financial Advisor the Tribune’s
deputy editorial page editor, John McCormick, “as somebody who was
the most biased and unfair.” After hearing that Tribune Financial
Advisor had assured Harris that the Tribune would be making changes
affecting the editorial board, Blagojevich allegedly had a series of
conversations with Chicago Cubs representatives regarding efforts to
provide state financing for Wrigley Field. On November 30,
Blagojevich spoke with the president of a Chicago-area sports
consulting firm, who indicated that he was working with the Cubs on
matters involving Wrigley Field. Blagojevich and Sports Consultant
discussed the importance of getting the IFA transaction approved at
the agency’s December or January meeting because Blagojevich was
contemplating leaving office in early January and his IFA appointees
would still be in place to approve the deal, the charges allege.

The Government is being represented by Assistant U.S. Attorneys Reid
Schar, Carrie Hamilton, and Christopher Niewoehner.

If convicted, conspiracy to commit mail and wire fraud carries a
maximum penalty of 20 years in prison, while solicitation of bribery
carries a maximum of 10 years in prison, and each count carries a
maximum fine of $250,000. The Court, however, would determine the
appropriate sentence to be imposed under the advisory United States
Sentencing Guidelines.

The public is reminded that a complaint contains only charges and is
not evidence of guilt. The defendants are presumed innocent and are
entitled to a fair trial at which the government has the burden of
proving guilt beyond a reasonable doubt.=