Golden (39 page)

Staffers for Topinka's campaign following the governor around with small video cameras caught the melee with the usually smooth-talking governor totally stymied and stammering. That was one little commercial Topinka could run against Blagojevich.

“It totally sent him over the edge. You couldn't even talk to him about it to try to get the story from him,” one former campaign staffer recalled. “Lou was like a brother to him. He was actually closer to Lou than he was to his own brother, and this whole thing ruined that.”

As Election Day neared, Patti's business continued to take heat amid revelations by the
Tribune
's David Kidwell that she had made $113,000 in real-estate commissions from a woman whose company had no-bid state contracts and whose banker husband was a major Blagojevich contributor. The story of Amrish and Anita Mahajan was the second time Patti's business came under scrutiny, unfurling a portrait of the First Lady as being more than an innocent bystander in the growing scandals.

But the escalating background noise of possible corruption reached a crescendo in October, less than a month before Election Day, when Fitzgerald charged Rezko as part of the Levine case, laying out in the most detail to date Rezko's involvement with the Blagojevich administration and Levine. Fitzgerald said Rezko used his influence with the administration to seek millions in kickbacks for himself and business partners and campaign donations.

The ten-page announcement from the US attorney's office in Chicago highlighted the corruption at the Teachers' Retirement System. It described Rezko as a businessman who “was involved in political fund-raising in Illinois” and said he was added as a defendant in “a pending federal corruption case.” But still nowhere in the document was the name Blagojevich.

The pending case was Operation Board Games, so named for the shenanigans at the state boards that Levine had spearheaded. The probe was orbiting the governor and was officially shifting to target what he knew
about the corruption of some in his administration. Levine's cooperation was by then public, and federal investigators' efforts to use him to record politicians —including Vrdolyak—were at an end. Levine would admit guilt within weeks of the Rezko indictment. And in his plea agreement came a clear signal that investigators knew that both Rezko and Kelly were part of an effort to turn their influence in the administration into cash payouts. Rezko was listed in the document by name and Kelly as “Individual B.” It was not welcome news for Blagojevich, who had to field and spin the developments while in the midst of a campaign for reelection.

But there would be other worries for the governor as well. Throughout the same period, federal investigators would come to learn, money seemed to be moving in arcs from people and businesses associated with Rezko toward the Blagojeviches. Rezko money started moving right around the time Kjellander got his cut from the giant Bear Stearns deal with the state.

Some in Rezmar—Rezko's development company—would tell the feds that they were asked to add dummy commissions to contracts in order for Patti Blagojevich to be paid for work she didn't do. In one deal in 2004, Rezmar took in a $40,000 commission, and that same amount was paid to Patti Blagojevich's company, River Realty, the very next day. The $40,000 was then paid to Patti herself from River Realty another day later. Federal prosecutors would allege that such Rezko arrangements were where the rubber met the road—clear examples of pay-to-play funds winding up in the pockets of the state's first couple.

Schar, Niewoehner, fellow Assistant US Attorney Carrie Hamilton, FBI case agents, and investigators from the IRS Criminal Investigations Division and US Postal Inspection Service worked for months to chase leads in the case and round up all the witnesses necessary to bring Rezko to trial. There was a long series of complicated financial schemes to unravel, and the team worked long hours to gather statements from those who could corroborate Levine's story. Insiders such as Beck and other members of the hospital board were turned into witnesses, and the investigators pooled accounts of hiring and fund-raising going through Rezko's office. The case against him would feature recordings corroborated by authoritative testimony by key players in the plans, a structure many prosecutors considered the bread and butter of the US attorney's office under Patrick Fitzgerald.

It was a stunning blow, but Blagojevich was relieved the indictment didn't mention him by name. Inside the campaign headquarters at Milwaukee and Division, it was all hands on deck—except for Blagojevich himself,
who was still at home. Monk, Scofield, and others were even joined by former governor Thompson, who was still with Winston & Strawn and sat in well-worn campaign furniture reading the indictment, talking with advisers, and looking for spots of weakness in the prosecution case.

That evening, Blagojevich finally arrived at the campaign offices to publicly address the charges. While acknowledging Rezko was a supporter and a friend, Blagojevich attempted to minimize Rezko's vast influence with the governor personally and the administration as a whole.

“If, in fact, these allegations relating to Tony are true, he betrayed my trust,” Blagojevich said. “He lied to me. He deceived me. But a lot more important than that, he violated the public trust.”

Topinka tried to seize on the developments, but her accusations ended up flat. Following Rezko's indictment, she overplayed her hand when she built up expectations that Stuart Levine's guilty plea would likely carry even more bombshells. When the plea agreement was made public, it was filled with tons of juicy details about Levine's illegal schemes but nothing close to a stake through Blagojevich's political heart.

That night, Blagojevich attended the Thirty-Sixth Ward Regular Democratic Organization's annual fundraiser in Rosemont. John Wyma stood by his side most of the night. Packed inside a convention center ballroom, Blagojevich was as cocky as he had been all campaign. Glad-handing with some of the old-timers who originally backed Blagojevich because of his father-in-law, they were still there for him even though Mell was gone. And Illinois voters were going to reelect him without his father-in-law's help.

“They got nothing—nothing!” he howled.

Four years earlier, the Democrats with Rod Blagojevich as their ostensible leader arrived in Springfield acting as conquering heroes, controlling both the House and Senate and all but one of the statewide offices. In 2007, they controlled everything, with Topinka's treasurer's office now in the hands of a young Democrat named Alexi Giannoulias. Yet as the crowds gathered on a bright and chilly January morning, a pall hung over the Prairie Capital Convention Center in downtown Springfield. It was in no small part because of that ostensible leader and his baggage.

At Blagojevich's first inaugural the convention center was filled to the banisters. His second inauguration was nearly half-empty. Blagojevich had
almost amassed 50 percent of the vote to Topinka's 39 percent, but it was no mandate. Perhaps the biggest sign of voters' discontent was that 10 percent voted for enigmatic Green Party candidate Rich Whitney.

Even Blagojevich seemed uninspired. By then, Monk had left to become a lobbyist. Tusk headed back to New York City for a job with Lehman Brothers. For deputy governor, Blagojevich got two people to take his place: Nix and Louanner Peters, a longtime aide who had come back to Chicago after running into problems in Washington, DC, using government credit cards on personal expenses while working for Mayor Marion Barry. With Rezko under indictment, Petrovic was keeping his distance. Even Kelly wasn't hanging around as much anymore.

The governor tried to build momentum and take attention away from his scandals by proposing a universal health-care bill. While Blagojevich hewed to his promise not to raise taxes on “the working class,” he said he would pay for it with a $7 billion tax on “gross receipts.” Blagojevich argued the tax would hit businesses, not consumers. But businesses and many Democrats recognized that the businesses would likely just pass the tax burden onto consumers.

None of it worked.

The feds stayed focused, and on a personal level, their work was starting to damage the Blagojevich family's finances. Publicly, River Realty came under greater scrutiny. It was discovered that Patti received at least $30,000 in commissions from John Wyma's purchase of a $650,000 Chicago condominium. The funny thing about the arrangement was that Patti Blagojevich didn't find the condo for Wyma. He had found it himself because he purchased it from one of his clients who owned an architectural, engineering, and construction firm that later won $10 million in state contracts.

A month later, it became clear that federal authorities were looking at River Realty as part of their investigation into Blagojevich and his personal finances. The feds had already subpoenaed Blagojevich's campaign records.

All the controversy over Patti Blagojevich's real-estate business was truly now taking its toll. Her business was drying up, and it was having an impact on the Blagojeviches' income. Blagojevich lashed out at those asking questions, calling their inquiries “Neanderthal” and sexist.

By the end of 2007, the noose closed even tighter.
Just as the Levine tapes and witnesses had made it clear who Rezko was in the Blagojevich administration and what he was doing, the same harsh spotlight was shining on Chris Kelly. Investigators had spent much of 2007 looking at questionable practices in Kelly's businesses and issues in his personal life. And there was plenty to find. Kelly was indicted in December 2007 on tax fraud charges, with federal prosecutors alleging he had understated his income by $1.3 million, sometimes using corporate funds to cover gambling debts. Kelly had wagered millions with a bookmaker and used funds from his roofing company to help pay losses, debts that Rezko also sometimes helped him with. It was just the first volley in what would become a series of federal shots against the intense and troubled Kelly, who had remained one of the governor's most trusted confidants.

In late 2007, just prior to being charged, Kelly spoke with federal prosecutors. They wanted to tell him he was in hot water and that he should assume that things were going to get worse for him and not better. He could still help himself, but it would mean cooperating. True to form, Kelly said very little, choosing to keep his tough exterior intact. Instead of telling the assistant US attorneys he would do what they wanted, he just stared them down.

On top of the breaking scandals involving those closest to him, Blagojevich's political agenda was going nowhere. With no friends other than Emil Jones in the legislature, Blagojevich's universal health-care plan flopped, with the House voting 107-0 against it. Blagojevich didn't know how to handle the massively embarrassing loss so he gave an answer that made sense to absolutely nobody. “Today, I think, was basically an up,” he said. “I feel good about it.”

Another series of budget battles broke out, but Blagojevich, acting more erratic by the day, wasn't going to defeat Madigan this time with his crazy games. Instead, Madigan outfoxed him, getting lawmakers to approve a budget over his opposition. They argued he hadn't negotiated in good faith— not a difficult argument to make. Blagojevich vetoed some of the spending, especially the money Madigan and House Democrats wanted. He also sued Madigan for convening a special session of the House a few hours earlier
than Blagojevich wanted him to. Blagojevich then antagonized lawmakers again by calling his own special sessions. But this time they just ignored him and refused to show up. The only thing he got passed was a massively expensive plan that gave seniors free rides on public transportation regardless of their income level. It ended up costing the transit agencies tens of millions of dollars.