Friday, November 11, 2005
Part 3 - Viiasge & American Decal with Lots More
Viiasge-Digital Drivers’ Licenses
Warner was involved with other SOS vendors as well. One involved the digitalization of state drivers’ licenses. For 5% of total contract revenues, Warner agreed to represent Viiasge, a small Massachusetts company that had obtained Wisconsin’s business. Warner beat out lobbyist Al Ronan and Ronan’s wife, Catherine Adducci, who was a representative of Unisys.
Warner received $834,000 from Viiasge through November, 2002, when his contract was terminated, according to the Feds.
Three days before Warner reached his agreement with Viisage Vice President Yona Wieder at a luncheon set up by Chicago attorney Irwin Jahn, Ryan and Warner returned from a Los Vegas vacation, during which Ryan paid his $280 hotel bill in cash, the Feds say.
Ryan is alleged to have told Scott Fawell that he wanted lobbyist Ron Swanson to share in the financial benefits. “Warner was unhappy that Ryan wanted him to split some of his fees with (Ron) Swanson, Ryan’s long-time friend,” the document reads. Without doing anything, Swanson got $36,000 from Warner. Neither Warner nor Swanson registered as a lobbyist for Viiasge; only lawyer Jahn filed. Warner got Viiasge’s checks and turned one-third over to Jahn.
Viiasge went public in November, 1996, shortly before the Request for Proposal for the digital licenses was announced. In December, 1996, Warner bought 7000 shares for about $83,500. The next April, Warner tipped ”lifetime friend” Larry Stern, an SOS employee about the stock. Stern purchased 1400 shares. He, in turn, tipped his friend and supervisor Pat Spizzinocco, who also bought Viiasge stock. Both sold at a profit after the Illinois contract was announced.
“Stock records also show that at least two additional Warner friends, as well as Ryan’s son’s business partner, and the husband of Ryan’s niece purchased Viiasge stock during this time frame,” the document continues.
American Decal Manufacturing
Another Warner client was American Decal Manufacturing held. It produced the license plate renewal stickers. First awarded the contract during Ryan’s predecessor’s term, ADM was virtually guaranteed continuation of the business because of the way the bid specifications were drawn.
Not having had a lobbyist before, in mid-1991, its president Thomas O’Brien got “a call out of the blue” from Warner. Warner warned O’Brien that 3M, a potential competitor, has just hired former Governor Jim Thompson as its lobbyist, a statement that the document says was “untrue.” To keep the contract, $2000 a month would be required for Warner, it turned out. The fee later increased to $3000 a month and in 1994 to $5000 a month.
In August, 1991, the title laminates contract that 3M held came up. Warner is said to have approached O’Brien and asked for an additional $67,000 for getting ADM the contract. 3M lost the $250,000 per year business. 3M had previously refused to hire Warner.
Ryan is said to have personally intervened with James Covert, the head of his Vehicle Services Division, when Covert stopped returning Warner’s calls. Later, after the bid specifications were made generic in 1993, Ryan told Fawell and Roget Bickel, “I want this back,” referring to the language that favored ADM. Ryan got his way.
After Ryan left office, lobbyist Warner helped a Detroit firm, MRM, a group of former ADM employees.
Affordable Temperature Control
Still another vendor that alleged received the Warner touch was Affordable Temperature Control, a Chicago heating and plumbing contractor that had done work for Warner’s businesses, a fire insurance adjustment firm called Lash Warner & Associates, and Economy Building and Maintenance. Warned called its president, Michael Brodsky, and asked if he would be interested in a project in the Capitol complex.
A month later, in January 1992, Brodsky received a letter from Physical Services Director Larry Fletcher informing him that ATC had been awarded a contract to help design the temperature control system. Before being awarded the contract, “Brodsky had not spoken with anyone at the SOS Office regarding the contract,” the proffer says.
The document alleges that Warner called Brodsky seeking compensation, saying he expected “8-10% of ATC’s total revenues.” Brodsky agreed on 8%. In the sixteen-month period, Warner was paid $8,240 which the Feds say Brodsky “understood…were essentially a kickback to Warner for his assistance in getting ATC the contract.”
Fawell entered Warner’s name in his “Favors List” as the sponsor of ATC’s contract.
Modern Business Systems
Nadine Libertore was a sales person with Modern Business Systems when SOS Accounting Revenue Director Georgia Marsh steered her to “Warner, whom she said was very close to George Ryan and was somebody who was dealing with vendors trying to do business with the SOS.” Libertore thought that meant Warner was a state employee. Marsh gave her Warner’s office and home phone numbers.
When Libertore called Warner he said something like “I have his ear,” the proffer says. He said “he would require a fee of approximately $2,000 a month. Libertore was surprised by Warner’s request, as she had never been requested by anyone to pay a fee to be able to do business with a state agency.”
She told her supervisors and was advised to “give Warner the benefit of the doubt as to his intentions,” as the filing states.
After a meeting in which Warner re-iterated his seemingly non-negotiable $2,000 per month fee, Modern Business Systems decided not to do business with Warner.
Lease of 17 North State Street
Warner approached David Kalish, the manager of the building at 17 North State Street in Chicago, representing himself as a broker for the Secretary of State’s Office. If the SOS rented the building, Kalish would pay Warner a commission of 6% of gross income. Warner concealed his financial involvement in the deal, inserting another’s name—Adolph Ottaviani--in the brokerage agreement.
In 1991, a six-year lease was signed, which was renewed after Kalish met with Fawell in 1998. Warner made $383,276 in commissions, the Feds intend to prove.
The Bellwood Lease
After the State Street lease was signed, Warner met with Ryan and Fawell to discuss moving the SOS Police Department. Warner suggested an office in Bellwood. Fawell expressed his reservations about negative publicity that might result from Warner’s role in leasing property.
“Warner responded that no one would find out about Warner’s involvement because there were various layers of paperwork and Warner’s name was buried in the various layers. Ryan was present for the conversation,” reads the government’s case outline.
Subsequently, Warner called Physical Services Department Director Alex Nelson and said “words to the effect,” according to the document, “we’ve got a location we want you to look at to put the cops in.” He also told Nelson that Ryan would be calling him and that Nelson should not tell Ryan Warner had called Nelson.
“About fifteen minutes later, Nelson received a call from Ryan’s office, who told Nelson he was to check out 405 N. Manheim Road in Bellwood,” the filing reads. Nelson, who met Warner doing campaign outreach to the black community, did so and found the building suitable. A five-year lease resulted. While Bernard Leviton signed the lease on behalf of BL Manheim, he transferred total ownership to Warner after the lease signing. The lease was renewed for another five years. Warner received about $171,000 related to the lease. He used $75,000 of that amount “to facilitate a loan to Comguard, financially struggling company…in which Ryan’s brother, Tom Ryan, had an ownership interest,” the document states.
The Joliet Lease
Warner learned of the expiration of a lease for the Administrative Hearings Division before the end of 1994. Ryan called AHD Director Len Sherman and told him to call Warner about finding new space. Warner pointed him to 605 Maple Road in Joliet.
Sherman concluded that it would work, with rehab work, but had too much space. The government says Warner told Sherman that other SOS offices would be housed there, a fact he did not know.
Warned again told Fawell that his involvement would not be discovered. The Federal outline says Warner “had a ‘front man’ named (Jerome) Purze.”
Two SOS employees involved in lease negotiations, Tom Cuculich and Rob Kirk, dealt with Warner for 4-6 weeks and did not learn he had a financial interest in the building. After the lease was signed, Warner got a 90% ownership interest in the building. The proceeds Warner is said to have received are $387,500 for the first four years of the lease.
“In a conversation with Donald Udstuen, after Udstuen learned about Warner’s interest in the Joliet property, Warner told Udstuen he never should have done the Joliet lease, because it was ‘too good a deal,’ which Udstuen understood to mean that Werner had made so much money on the deal that it would raise questions about the propriety of his role in getting the lease,” the proffer states.
Warner Financial Benefits to George Ryan
The government outlines some of the evidence of gifts, payments and benefits to Ryan, his family, his staff while Ryan was Secretary of State:
Ryan’s Relationship with, and Promotion of, Comguard
Comguard is a firm that monitored parolees on home confinement. Ryan’s brother Tom, a former mayor of Kankakee, was an original owner when it was founded in 1991-92. He sold the majority of his shares in 1999.
The government charges, “Throughout his term as Secretary of State and during the first year of his first year as Governor, defendant Ryan used his government offices to support and promote Comguard, while Warner advanced a total of approximately $145,000 in ‘loans’ for Comguard.”
When the company was in financial trouble, Warner is alleged to have bailed it out. This is mentioned at least three times in the government document, including a repayment to long-time Ryan friend Harry Lockman of $95,000 secretly paid to settle a complaint against Comguard by Kankakee County government. This $95,000 was repaid to Warner without interest.
Comguard held a contract with the Illinois Department of Corrections for 7 years, providing substandard service, according to the outline of the government’s case. When he became Governor, Ryan spoke with Don Snyder about electronic monitoring vendors in the Mansion after his first cabinet meeting. Ryan told Don Snyder that he “understood that one of the electronic monitoring vendors had a lower price and, that all else being equal, it would seem to make sense to use that vendor.” A footnote says that vendor was Comguard.
Ryan then told Director Snyder to just to do what was “best” for the Department, the relates.
When Tom Ryan sold most of his shares in 1999 and was paid about $155,000, two days later he wrote a $3,500 check to his brother with the notation “gift.” Ryan did not report the gift on his Statement of Economic Interests.
In March of 2000, a U.S. grand jury from the central Illinois jurisdiction subpoenaed records relating to Comguard.
Harry Klein South Holland Lease and Jamaica Vacations
Former appointed State Representative and George Ryan Labor Relations Board appointed Manny Hoffman introduced currency exchange chain owner Harry Klein to his friend George. From about 1993 through 2002, Ryan and his wife stayed as a guest at the Jamaican home of Harry Klein. Starting in 1994, Scott Fawell and his wife accompanied them through 2000. Hoffman, Klein and their wives were also there, the government reports.
On at least two occasions the two couples were guests at Klein’s Palm Springs, California, home.
The U.S. Attorney’s Office alleges that Ryan would write Klein a check for $1,000 for each week spent in Jamaica, but that Klein re-imbursed Ryan and Fawell in cash, which both accepted.
“Ryan agreed with these sham transactions,” the filing says, “because Ryan was concerned about how it would look if the press noticed that Ryan was a guest of Klein at the same time that the SOS office regulated the activities of currency exchanges…”
In about 1997, Klein brought up the possibility of renting a building in South Holland to the SOS while vacationing with the Ryans and Fawells. Upon returning to Illinois, both Fawell and Ryan talked to Driver Services Director Mike Chamness about leasing the building. Ryan, the government says, “instructed Chamness to work something out to use his building as a driver’s license facility, and he Chamness the phone number in Arizona where Klein could be reached.” He also told his employee that he, Ryan, wanted to be the one to tell Klein about the awarding of the lease.
Chamness decided to close the Lake Calumet office, although there were no plans to close it before Ryan called Chamness.
At a 1997 Bulls game, Klein thanked Ryan for the South Holland lease. According to the government, this angered Ryan, because Ryan wanted to be the one to tell Klein about the lease. Chamness got bawled out by Ryan the next day. Chamness later discussed outstanding issues concerning the lease with Ryan and Ryan is said to have directed they all be decided in Klein’s interest.
Trying to get out of hot water with Ryan, Chamness wrote a memo outlining the Secretary’s personal involvement in the lease. Ryan personally signed the lease, an unusual event in the Secretary of State’s Office.
Jim Esslinger, a SOS employee who reviewed the lease, estimated that the rent was $2-4 per square foot too high and that the parking lot was too small for commercial driver’s license (CDL) testing.
The Role of Lobbyist Ron Swanson
The government also outlines gifts, payments and benefits of longtime friend and lobbyist Ron Swanson.
Swanson admitted lying about a McPier official contacting him and about a law firm informing him they needed his lobbying assistance for McPier. The plea did not go deeply into the charges the government had leveled against Swanson. Swanson’s attorney has maintained that Swanson’s memory fails periodically.
Swanson’s gifts include:
The government admits that Swanson has never admitted giving money to Ryan, but notes that, ”while Swanson was putting $4,000 into Udstuen’s pocket, for the Wisconsin Energy lobbying referral, he told Udstuen that he was also ‘taking care’ of Ryan.”
About $175,000 is also alleged to have been withdrawn from Swanson bank accounts from 1999 to 2001.
“The cash transactions are noteworthy, not just in their volume, but in their timing,” the government says. “Several coincide with Ryan’s birthday on Feb. 24, a date which is typically on Swanson’s calendar,” the proffer continues:
· For instance, On Feb. 24, 1998, Swanson withdrew $3,300 in cash.
· On Feb. 23, 2000, at approximately 2:30 PM , Swanson obtained $5,000 in cash. According to his calendar, Swanson say Ryan at 6 PM that night.
· On Feb. 21, 2002, Swanson assistant Kent De Lay obtained $3,000 in cash for Swanson at 10:30 AM. Swanson’s calendar reflects that he was “w/ the Governor @ Capitol” at 12:45 the same day.
How Ryan Helped Ron Swanson:
These include
Rental of Springfield’s Lincoln Towers at a rate that “far exceeded the normal price per square foot for comparable office space.” Although Ryan told Fawell that Swanson, its rental agent would not take a commission, Swanson got about $38,000.
Providing Swanson with inside information that Grayville had been selected for a prison site. Swanson entered into a $50,000 lobbying contract with businessmen headed by local booster Dr. Clyde Wilson.
“Swanson’s handling of the Grayville fee corroborates the evidence he was tipped off to Grayville’s selection as part of a corrupt relationship with Ryan,” the proffer charges. “Swanson deposited the $50,000 fee he had received from Dr. Wilson on or about March 12, 2001. Thereafter, on March 26, 2001, two sequential checks for $7,000 and $8,000 made payable to Swanson were written on his account. The first, for $7,000, was cashed on March 28, 2001. Swanson’s calendar reflects a meeting with Ryan on Marcy 29, 2001 at 11:30 AM. The second, for $8,000, was cashed by Swanson’s secretary for him on April 4, 2001.”
A footnote says, “In late May of 2001, Swanson duplicated the March transaction by structuring another $15,000 cash withdrawal into $7,000 and $8,000 transactions. Thus, in approximately a sixty day period after receiving the $50,000 fee, Swanson received $30,000 in cash.”
The email notifying the Corrections Department of Grayville’s selection was sent April 10th. At the public announcement on April 12th Ryan, at Swanson’s request, publicly acknowledged Dr. Wilson’s efforts in promoting Grayville’s selection.
When Wisconsin Energy was seeking an Illinois lobbyist in 1999, Nick Hurtgen asked Don Udstuen’s advice. The government says that Udstuen conferred with Ryan and Ryan suggested Swanson. He was hired.
(Hurtgen was identified in a whistle-blowing suit filed by Naperville’s Edward Hospital. In the alleged scheme, Janesville’s Mercy Health Systems was assured it would receive a permit to build a new hospital in Crystal Lake, if its financing were through Bear Stearn. Hurtgren was the head of the firm’s Chicago office before he resigned.)
Swanson then solicited another member of Ryan’s “kitchen cabinet,” former State Rep. Pete Peters (R-Chicago) to assist with the lobbying. Peters, as exclusively reported in Illinois Leader [http://www.illinoisleader.com/news/newsview.asp?c=6580], was given a sweet heart job in Ryan’s Secretary of State’s Office for 4½ weeks over a thirteen month period during 1991-92 to increase his legislative pension. The pension started at $51,000 and has increased, as do all state pensions, by 3% a year since then. Peters was also appointed by Ryan to a $25,000 per year sinecure as chairman of the Illinois Clean Energy Community Foundation.
Swanson put $4,000 into Udstuen’s pocket I the men’s room of a downtown Chicago restaurant for making the referral, the government says.
When Scott Fawell was appointed head of McPier by Ryan called him and told him to hire Swanson as a lobbyist on behalf of the McCormick Place expansion project, according to the proffer. Ryan told his former chief of staff that Swanson was to be paid $5,000 a month. Roger Kiley of the law firm Mayer, Brown and Platt agreed to take Swanson on, but said his firm’s fee would increase by $5,000 a month.
Under the heading of “Perks and Privileges,” the government lists the following bestowed by Ryan:
· Full use of the ante-room next to Ryan’s governmental office (“he often loitered there, carrying on his lobbying business with unrestricted access to Ryan and Ryan’s staff”).
· Government jobs for Swanson’s son and associates.
· Free parking in the Capitol complex, even though Swanson held no governmental position.
Awarding Low-Digit License Plate Numbers
to Those Providing Campaign or Personal Benefits
Rewarding campaign supporters with low-digit license plates is a time-honored tradition in the Secretary of State’s Office. In outlining its case, there are echoes of what people said that Paul Powell did when he was Secretary of State. While checks for license plate renewal are no longer written to the occupant of the office—as they were in Powell’s time—issuance of the low-numbered plates are certainly not random.
The government alleges that Warner advised Ryan that he had to keep track of the low-numbered plates. Warner referred to them as “plums.”
From 1991-1999, “Ryan personally approved the award of the most coveted low-digit plates, and many were awarded to Warner and many were awarded to Warner’s acquaintances and business associates,” the filing states.
Those specifically mentioned include
· Robert Casey, whom Ryan called in 1990 asking “as a friend” for $75,000 to run television ads. Casey called a friend who loaned the money, which was repaid shortly after the election. Ryan wrote Casey a personal note saying, “Words are sometimes inadequate to express appreciation and thanks to friends. But until I can do better, words are it.” Ryan offered both Casey and his friend low-digit license plates, which they accepted. Casey is believed to be the same Robert F. Casey who served briefly as state representative with Ryan in 1979-80 and, previously, from 1957-61. If so, he also served as interim Kane County State’s Attorney in 1988 and was named administration for the Illinois Gaming Board during Ryan’s term as Governor.
· Anthony De Santos, owner of Drury Lane Theaters, is said by the Feds to have told Ryan in 1997 that he wanted to contribute $2,000 for his gubernatorial campaign, but didn’t want to write a check for more than $500 because he did not want to be listed on disclosure forms. (Illinois requires disclosure of all contributions over $150. Those $500 and above have to be reported within two days in the last 30 days of a campaign.) The government says that Ryan suggested he make out four checks of $500 apiece to himself, his wife, his son and his daughter-in-law and mail them to him, which De Santos did. Subsequently, he wrote another $500 check to Ryan in December and $500 checks to Ryan and his wife in 1998. All were cashed, the proffer says. Ryan did not declare any of the money as gifts, until he learned that the government had discovered them. Then, he amended his income disclosure forms. De Santos was offered plate number 217 three weeks after the 1998 December checks arrived. He accepted the offer.
· Larry Warner’s friends: Warner was influential is the issuance of so many low-digit plates that he established a “kitty” in one of Ryan’s secretary’s desks to pay for plates without delay. Warner would ask Ryan’s staff to look up specific numbers. Warner would often know before Ryan of the availability of low numbers. The government says that while Ryan was Secretary of State that Warner designated the recipient of over 90 low-digit plates. One of the earliest in 1991 was to Jim O’Brien of American Decal Manufacturing.
Disbanding the Inspector General Department
George Ryan’s attitude toward corruption in his Secretary of State’s Office may be summed up in an uncorroborated statement made to Cook County State’s Attorney Jack O’Malley (now Appellate Court Justice from McHenry County): “Fuck you, Jack. These are my guys.”
The statement was supposedly made in the presence of his Assistant State’s Attorney for Public Integrity Patrick Quinn, who apparently vividly remembers the meeting. O’Malley, according to the proffer, does not. Quinn associates, however, remember his having told them about the incident.
It happened about May, 1992, right before a press conference in which O’Malley was to announce indictments relating to the fraudulent issuance of drivers’ licenses by the manager of the Midlothian office.
“Quinn said he was stunned by the import of the statement—that Ryan’s political people were not to be touched,” is the way the proffer puts it.
The confrontation was an early indication of what the government says that Ryan, using Fawell as implementer, did to the Secretary of State’s Office. Fawell “put in place a fundraising and political structure to in order to raise funds on behalf of Ryan for his re-election or possible run for higher office,” the government’s outline of evidence reads. “Under this system, some SOS employees were in charge of fundraising activities and other SOS employees were strictly political operatives, with little or no government responsibilities. Some did both…Fawell kept Ryan appraised as to which employees had helped raise money for Citizens For Ryan and which employees were political operatives within the SOS Office.”
As has been outlined numerous times in open court in the Safe Road Investigation, fundraising tickets were distributed to employees and they were expected to sell their quota or eat them. If ticket sales were slow in a given department, Fawell was informed and applied the hammer. Star sales people were rewarded with photo ops with the Secretary himself at “thank you” luncheons which, the Feds say were typically at least partially on state time. Some type of “pretextual government meeting” would be called to get the employees to where the luncheon was being held.
But, the super salesmen got more than a photograph with the boss. The government says they got raises and promotions for their political activity. Fawell is expected to testify that he met with CFR officials to discuss who deserved taxpayer-paid rewards. Ryan signed off on the results, the document says.
Ryan’s Inspector General’s Office had investigated and exposed the fundraising scheme at least four of the drivers’ license stations:
Midlothian:
The only tidbit offered in the government’s outline of evidence is the interchange between Ryan and O’Malley. Ryan’s “mind your own business” expletive response came after O’Malley and Quinn discussed the opportunities for further SOS prosecutions.
Libertyville:
A raid on the Libertyville facility was conducted by the Inspector General’s agents and Lake County officials in March, 1993. A prior investigation had found SOS employees selling driver’s licenses to illegal aliens. During the raid, investigators found $2,500, CFR fundraising tickets and an accounting of ticket sales in an open briefcase in James Quinn’s office.
Dean Bauer was shown what was found and called Ryan from Quinn’s office. Bauer apparently told government officials that Ryan “didn’t like surprises” and that the briefcase was the kind of thing that Ryan would want to know about.
The evidence was logged in, but four years later, in 1997, Inspector General Dean Bauer took the contents out of evidence and they were never seen again, according to a footnote.
Bauer was the first close associate of Ryan to be convicted in the Safe Road Investigation.
In an article published May 10, 2000, Ryan told a Medill Journalism School student:
"It's been going on for years. It's probably going on right now, as we talk," he said. The ideal of ending corruption entirely "is kind of like having a perfect system of justice for the death penalty. . . . The temptations are there, and people are weak on some occasions."
Bode asked whether the corruption had been "news to you" when the federal investigation began. Ryan said his office constantly had investigated the issue and had run sting operations, although he had had no idea that funds allegedly were being diverted into his campaign coffers
"We took a lot of actions and did a lot of investigations," he said. "I don't know what more we could have done. The hindsight's great. People say, 'You should have done this,' or 'You should have done that.' "
While some of the money may have landed in his campaign coffers, those running the bribery scheme "for the most part put that money into their pockets," Ryan asserted. To say they were helping his gubernatorial campaign "was kind of a good excuse for them. All of that money didn't come into the George Ryan campaign fund."
After Deputy Inspector General Joseph Jech’s interviewed Deb Dittmer, CFR Finance Director, she immediately interviewed called Fawell. Conferring with Richard Juliano, who pled guilty in April, 2002, to a single count of mail fraud in connection with being on the state payroll while doing a political job, Fawell is said to have “told Juliano that he was going to talk to Roger Bickel to have Jech ‘reigned in.’”
The document says that Fawell was with Ryan on the day of the Libertyville raid. Further, that he convinced Ryan to fly to Libertyville for damage control purposes. While there, Ryan and Fawell were told the raid had centered around fundraising issues and the selling of tickets.
Naperville:
A year after the Libertyville raid, Senate President Pate Philip enters the picture when Russell Nisivaco, manager of the Naperville facility, got into trouble with the IG’s Office when $2,600 in cash receipts did not show up at the bank just weeks before a Ryan spring fundraiser. Agents Russell Sonneveld and Ed Hammer didn’t originally suspect the fundraising connection, but after Nisivaco took and failed a polygraph exam, under questioning, Nisivaco admitted “feeling pressure to sell the tickets, but continued to deny wrongdoing,” the document continues.
After the polygraph test, Nisivaco went home and wrote his political sponsor, who happened to be Philip. He told Philip that he was a Naperville Republican precinct committeeman and wanted to keep his job. The final sentence of his letter read, “The last thing I want is to cause any negative events to hurt our party. Please allow me to continue my employment with the Secretary of State’s Office.”
“Shortly after this,” the proffer says, “Philip contacted Ryan to find out what was going on in the investigation. Ryan then called Bauer and asked the same question. Bauer did not know the circumstances of the investigation, and Ryan told Bauer to find out what was going on.”
Ryan got a private telephone briefing from agent Sonneveld. “Ryan did not express any particular opinion,” the outline says. Sonneveld filled Hammer in on the conversation and, when he returned to the office, Bauer asked for separate memos from both, took them and the disk and told them “to do no further work on the case.” The case was later closed. The proffer notes that the disk was found in Bauer’s desk after he left office in 1999.
The Guzman Case
Agent Sonneveld got on the case when he read that an Illinois licensed truck driver involved in a Milwaukee accident which killed the six Willis children in November, 1994, could not speak English. He pulled tuck driver Ricardo Guzman’s driving record. They showed he has obtained his Commercial Drivers License (CDL) at the McCook Facility from employee Marion Seibel in 1992. “Sonneveld had received previous complaints about alleged misconduct by Seibel,” the proffer states. From previous investigations, Sonneveld knew that Seibel was “heavy” with Ryan’s fundraising apparatus.
On his own, Sonneveld contacted Wisconsin authorities and, then, telling Bauer what he had done, asked Bauer’s permission to open a case. “Bauer told him not to open a case and to let the Wisconsin authorities handle it.” (The proffer underlines the word “not,” the only place in the document underlining occurs.)
Sonneveld press Bauer, telling him that Wisconsin authorities knew nothing of Seibel and McCook. Bauer stood firm. Virtually concurrently, Bauer was telling another SOS official that an official investigation of Guzman was taking place, the filing says.
Bauer was, of course, acting with the knowledge that Ryan gubernatorial opponent Glenn Poshard ran slashing television ads connecting Ryan to the Willis accident.
Fawell’s Communications with Ryan about Disbanding the Inspector General’s Office
It takes three pages for the U.S. Attorney to tell about how Fawell and Ryan talked about disbanding the Inspector General’s Office.
Fawell, with Ryan’s approval, was trying to disband the Inspector General’s Office at the end of 1994 and the beginning of 1995. Part of the reason was the persistent inquiries into investigate Ryan’s campaign fundraising efforts. One memo to Ryan suggests keeping Bauer as Inspector General, but striping him of his staff. The December memo stated Ryan needed to get “someone in there who won’t screw our friends, won’t ask about FR (fundraising) tickets, and who will run a no-nonsense shop. Someone tough has to go in there and get the investigators to no longer freelance as they see fit.”
In discussing the memo with Ryan, “Fawell noted that Ryan was well aware that the IG investigators were posing a problem to the CFR fundraising apparatus by their persistent inquiries into ticket sales, and that they were not paying any attention or taking any direction from Bauer,” the proffer says. “Ryan approved Fawell’s proposal to disband the IG office.”
They also decided to “abolish” Deputy Inspector Jech’s position and transfer the agents who were “trouble” to other duties. A dispute between the SOS Police Department Director Jack Pecoraro and Bauer, with Bauer complaining he was being cut out of the picture resulted in a re-constitution of the Inspector General’s Office.
So, Fawell, along with Juliano, began discussing downsizing the Inspector General’s Office. The words Fawell used were “you can’t trusts those fucks anyway.”
On Feb. 17, 1995, Fawell summoned Jech to an unscheduled meeting at his office. He told Jech that his employment would be terminated for budgetary reasons, asked for and received a resignation letter. At the end of May all IG special agents were transferred or fired. Duties and Bauer, still with his title, were transferred to the SOS Police Department.
Taxpayer-Subsidized Campaigns
A litany of diversions of taxpayer-paid resources in the outline of evidence just skims the surface of how George Ryan intervened in campaigns. In the description of the government’s case are
Scott Fawell and Rich Juliano started meeting in early 1993 to discuss how to get Ryan re-elected Secretary of State. They discussed personnel needs for field operations, phone banking, passing candidate petitions, precinct walking, marching in parades, and attending campaign events, among other things. The government says that most of their preliminary discussions took place “on state time.”
The state was divided between the Chicago metropolitan area and Downstate, then, further parceled into zones and, finally, regions. “For both the 1994 and 1998 elections, virtually every regional manager, zone manager and area coordinator was an SOS Office employee,” the filing says.
In mid-1994, a handful of SOS employees, including Juliano, left the state payroll to be employed by Citizens for Ryan. “However, with the exception of these handful of individuals, the SOS/CFR coordinators remained full-time SOS Office employees and continued to perform campaign work on state time,” the proffer states. Even Fawell, who is said to have done substantial campaign work each day, continued to receive his state paycheck.
The government intends to prove that substantial campaign work was done on state time between the fall of 1993 and the 1994 eleciton “with both the explicit and implicit authorization of Ryan, Fawell, Juliano and others.”
Ryan’s 1998 Campaign for Governor
The Ryan for Governor campaign was on hold until Governor Jim Edgar announced his retirement in the summer of 1997. Immediately, Fawell started contacting people he wanted to get involved. One of the first was Juliano, who was now working for a law firm earning about $6,000 a month. Fawell agreed to match that salary for September out of CFR funds. The proffer relates how Fawell told Juliano he could not afford to pay him with campaign funds, but would get him a contract with the Secretary of State’s Office “which would compensate him for his campaign efforts. Juliano agreed to participate in the fraudulent arrangement.” He got paid $5,000 a month. “From approximately October, 1997, toin or about early February, 1998, Juliano performed exclusively campaign-related work, but was paid approximately $22,500 from the SOS Office.”
One of Juliano’s first jobs after being hired by CFR was to set up a schedule, with Fawell’s approval, of SOS employees who would be transferred to the CFR payroll during the campaign. The two discussed a plan to move employees over on a rotating basis. The project payroll was too much for the campaign to handle, according to the Feds. The money was needed for end-of-campaign advertising. The SOS employees, nevertheless, began to work on the campaign “on state time, while being paid by the SOS Office.”
Close campaign advisor Udstuen advised Ryan in the fall of 1997 that Fawell needed to be taken off the state payroll. The proffer relates, “Ryan agreed….Nonetheless, Fawell was not taken off the SOS payroll until February, 1998.”
(Parenthetically, it should be noted that both Udstuen and Fawell have cut deals with the U.S. Attorney’s Office.)
Starting about a month before the March primary election, numerous employees were working “virtually full-time” for the campaign, even though their time sheets showed they were spending 75% of their time doing state work. Certain employees, like new-hired Assistant Secretary of State Glen Bower, who served in the Illinois House with Ryan, were concerned with the absences.
Fawell faxed Bower a memo “articulating the scheme to divert certain SOS employees and resources and to conceal the diversion. For example, speaking of the Diverted Employees, Fawell stated “they are all leaving their (SOS) spaces ‘lived in’…when any calls come in they should take a message—say the person is out at a meeting.”
Several memos the Feds call “window dressing” were issued by Ryan during the campaign warning that fundraising efforts were not to be conducted for Ryan on state time.
The proffer says that “Ryan learned early in the1998 campaign about the dispute between Fawell and Bower. Rather than chastising or admonishing Fawell, Ryan told Fawell to ‘work it out’ and handle whatever issues Fawell had with Bower so that Ryan would not be bothered. Ryan’s cavalier approach to the issue reinforced longstanding policy by Ryan and CFR that the ends justified the means in terms of diverting state employees for campaign work.”
Bower, an attorney and former head of the Federal Railroad Adminstration, is cooperating with Federal authorities and testified in Fawell’s trial. It is perhaps worth noting that Federal law on workplace ethics is significantly stronger than state law.
In a spring meeting Fawell called with high-ranking campaign and SOS officials, “Fawell made it clear that CFR would continue to divert SOS resources as necessary for the campaign, notwithstanding Bower’s opposition. Bower again voiced objection and raised the specter of ‘ghost payrolling’ prosecution if Fawell continued his diversionary efforts to benefit CFR. Bower told Fawell that, “several blocks from here” (a reference to the Federal building), there was a ghost payrolling investigation going on (a reference to the Haunted Hall prosecutions) and that Fawell was headed in that direction.
“Fawell dismissed Bower’s concerns, telling Bower that ‘the people who are working over here taken that risk’ and that, in any event, ‘the campaign cannot afford to have these people on the payroll full-time.”
The proffer also talks of discussions about “how the campaign would make use of state cars, phones, supplies and parking spots to reduce expenditures” for the campaign. After the meeting, however, Fawell and his assistant, now finance Andrea (Coutretsis) Prokos—with Juliano’s knowledge—“authorized the falsification of time sheets and logging on to state computers (for employees actually at CFR) to mask that employees were working at CFR offices on state time.”
This deception continued until three months before the election, the Feds say, when Fawell authorized the putting the diverted Secretary of State’s employees on the campaign payroll.
U.S. Senator Phil Gramm’s 1996 Presidential Primary Campaign
Ryan decided to endorse Texas U.S. Senator Phil Gramm in the 1996 presidential election. He headed his Illinois campaign. Meeting in the spring of 1995, Ryan, Fawell and Juliano agree, according to the proffer, that they all could make some money for their efforts on Gramm’s behalf, but that the money could not come directly. They didn’t want Gramm to find out. Ryan, according to the document, called Udstuen. Udstuen, following his money-laundering path with IBM lobbyist Larry Warner, made arrangements with Alan Drazek to disguise who got what by using his company American Management Resources. Udstuen suggested, and the three agreed, to give a cut to Drazek.
Both Juliano and Fawell set up consulting companies and the Gramm campaign signed a contract with Drazek. “Ryan instructed Fawell that his cut of the money should go to his (Ryan’s) adult children…
“A substantial portion of this Gramm campaign work took place on state time,” the paper says.
Beginning in the summer of 1995, monthly payments were made to Drazek’s AMR. Because of the structuring of the payments that flowed through AMR to Juliano, Fawell and Ryan’s children, none of the over $33,000 showed up on Federal Election Commission records.
Ryan is said to have omitted the payments from his 1995 and 1996 Statements of Economic Interest forms, as well as from his “original and amended 1995 and 1996 federal and state income tax forms. In the wake of publicity concerning the benefits he had received from the Gramm campaign, Ryan filed second amended tax returns for 1995 and 1996 in which he made false and misleading statements to the IRS claiming that it was the Gramm campaign’s idea to pay Ryan for his role in the Gramm campaign.”
Lee Daniels Named in 1996 Deal with Ryan to Maintain House GOP Majority
For the first time, the name of State Rep. Lee Daniels (R-Elmhurst) and one of his political action committees, the House Republican Campaign Committee (HRCC) appear in a federal document. If mentioned in any previous filing, he was identified by some pseudonym, such as, “Official One.”
The proffer says, “In the Summer of 1996, George Ryan and then Speaker Lee Daniels agreed that Ryan would dedicate selected SOS/CFR coordinators to support Daniels in his attempt to keep Republican control of the Illinois House.”
Fawell summoned his supervising coordinators to a meeting at the State of Illinois building to outline the deal and discuss how it should be implemented. Fawell also indicated that the staff would probably be paid for its political work this time. Coordinators were eventually assigned to specific House races.
“In furtherance of the Ryan-Daniels’ accord,” the proffer says, “Fawell also discussed and arranged with Jack Dorgan, Daniels’ principal representative at the House Republican Campaign Committee, that Fawell’s SOS/CFR people would be compensated for their efforts. (Dorgan is now a village trustee in Rosemont.) Fawell then drafted a document that listed each of the individual SOS/CFR coordinators who were to be assigned to targeted House races, the race they were assigned and the amount of money they were to receive.
“This document was then provided,” the proffer continues,” to Roger Stanley, a Fawell associate and HRCC ally, who agreed to make payments to Fawell’s people from a business account at Stanley’s direct mail company, Unistat. By using Unistat, a private company, as a conduit for the payments, Fawell and his SOS/CFR coordinators avoided identification and disclosure on campaign expenditure disclosure forms (‘D-2’s’) relating to the payments made to these full-time SOS Office employees who were working on the 1996 HRCC races.”
The Ryan-Daniels’ section concludes that “a significant amount of their campaign work for these races” was done “on state time.”
The proffer merely hints--like the tip of an iceberg-at how much state resources were used for overt political purposes by Ryan and Daniels
It is worth noting that the source of the money being used for payment would also go unreported. Presumably it came from the HRCC, but the proffer does not say so.
Illinois Leader has previously revealed that Daniels used legislative assistants to work on behalf of the 1996 re-nomination of State Rep. Ann Hughes (R-Woodstock) when she was challenged for the 3rd time by Steven Robert Verr of McHenry. [http://illinoisleader.com/news/newsview.asp?c=6102] This was an election in which a fake taxpayers’ group was set up to endorse candidates opposed by Jim Tobin’s National Taxpayers United of Illinois, which endorsed Verr in the 1996 primary election. The Daniels’ forces used the same Stanley firm mentioned in the Ryan-Daniels deal during the summer of 1996. Named in the memo obtained by Illinois Leader are Daniels’ employees who worked on state time.
Scott Fawell’s Mother’s 1994 Re-nomination Campaign for State Senate
When Scott Fawell became Secretary of State George Ryan’s top assistant, his mother Bev was already in the State Senate. In 1994, she was challenged by DuPage County Board member Michael Formento.
A negative February media report spurred her son to convene a meeting “to save Bev,” as the proffer puts it. “Fawell directed that the assembled SOS Office employees provide Sen. Fawell's campaign comprehensive campaign assistance, including press relations assistance (Torre), opposition research (Shapo), fundraising (Twiss) and polling services and related phone banking activity (Juliano), among other things. The fundraising efforts directed by Fawell included the distribution of his mother's campaign tickets throughout the SOS Office ticket distribution process (which process is described herein).
“After the meeting, and at Fawell's direction, Fawell's SOS Office team went about the business of assisting Sen. Fawell's campaign as Fawell had outlined. Fawell's SOS Office team performed substantial portions of the campaign activity on state time.
“In addition, as the election drew near,” the proffer continues, “additional SOS Office employees were directed to conduct campaign work for Sen. Fawell on state time. For example, in and around the primary election day, SOS Office employees (including Christopher Frerichs) working out of the executive offices in Chicago were directed, during the work day, to go to work at a phone bank at a Wheaton, Illinois law office to support Sen. Fawell.
Ryan’s Nephew-in-law’s 1992 Campaign for State Representative in Kankakee
Ryan’s first foray using SOS staff resources is alleged to have been helping his nephew Bruce Clark will his old state rep seat in Kankakee County. Clark was married to Ryan’s niece and worked for the SOS.
In the fall of 1991, Ryan attended a meeting with Clark, Juliano and other high level Republicans to discuss Clark’s potential candidacy. When Clark made up his mind to run, the document says, “Scott Fawell and other SOS officials, working on behalf of CFR under defendant Ryan’s authority, committed to assisting the 1992 campaign efforts of Clark….Fawell told SOS employee Brad Roseberry and other SOS employees” that they would be working on Clark’s campaign.
Although a Chicago-based employee, Roseberry was assigned to coordinate the Clark campaign, “spending substantial portions of his governmental time in the months leading up to the November election in the Kankakee area performing campaign functions.
Within two months of the election, he filing reveals, Roseberry was ordered immediately back to a meeting in Chicago. The meeting “took place in Ryan’s Chicago office during regular business hours.”
“At the meeting Ryan requested an update and overview of Roseberry’s activities on Clark’s campaign.”
After Roseberry did so, “one of the participants recommended that they should move Roseberry off the SOS payroll in the remaining weeks before the election. Fawell responded no, that they would not be changing Roseberry’s work status…Roseberry continued to work virtually full-time for the Clark campaign through the election, even though he remained on the SOS Office payroll as a full-time employee,” the proffer concluded.
Obstruction and Concealment
Two months before the 1998 gubernatorial election and several days after the Melrose Park drivers’ license facility had been raided, SOS employee Bill Mack had a phone call with Fawell. Mack, who had an office near the executive offices, was told by Fawell that “he had a concern about SOS employees having campaign-related material in their work areas,…that these individuals would need to get rid of these campaign materials immediately,” according to the court filing.
A short time after that, “Mack recalls seeing Fawell and George Ryan at the Chicago SOS office,” the document continues. “Fawell was standing to one side of the office while Ryan was sitting on a couch and reading a document. Ryan then went over to where Fawell was standing and the two talked privately…, and then Ryan returned to the couch.
“Fawell,” it continued, “then repeated that he wanted Mack to contact everyone on the fifth floor of the SOS office to determine what campaign-related documents were located on the premises and make sure that such documents and materials were immediately destroyed. Fawell again made it a point of advising Mack that there could be some type of raid by federal authorities occurring as early as the following Friday, September 11.
“After Fawell made his remarks to Mack, he turned to Ryan, who remained seated on the couch and said to Ryan words to the effect of ‘hey, George, I told Bill to go around and tell people to get stuff out of their offices.’ After Fawell made this comment, Ryan abruptly got up from the couch and left the office.”
Following Ryan and Fawell out of the office, Mack saw the two “stop and speak privately for approximately one to two minutes within the reception area outside of Fawell’s old office,” the paper continues.
A footnote says that Fawell does not remember the meeting being in the Thompson Center and “believes, if it occurred, would more likely have been at the offices of the CFR.”
Mack then conveyed Fawell’s request to those still in the office and recruited CFR employees to assist. Brought to the shredder, according to the proffer, were
Within a couple of days, “Mack also reported to Ryan that the fifth floor had been cleaned up,” it continues. “Ryan made no response, but also gave no indication that he did not understand what Mack was talking about.”
A second round of shredding happened in October of 1999, when Dean Prokos got a phone call from his now ex-wife Andrea Coutretsis Prokos. By then working for McPier with Fawell, she requested her husband’s assistance in removing boxes from the campaign office. When she brought them home, he helped unloaded them and put them in their Woodridge home’s basement. Andrea told Dean that the Fawell had told her to get rid of the documents and that they could get a lot of people in trouble, the proffer says. The boxes remained untouched for months until Andrea told Dean a subpoena or search warrant was likely because she worked for Fawell.
On October 30 1999, the two took the boxes to Dean’s sister and brother-in-law’s. The talked with Ernie and Frances Katris about getting rid of the documents in their basement. They started using a shredder in the basement, but it was deemed unsatisfactory because it did not cross cut the paper. After discussing disposal methods, they settled on using the now infamous barbeque grill. [See Illinois Leader cartoon.]
It didn’t work, so they decided to leave them in the Katris’ basement.
Before finishing their work that day, “they came upon a computer zip drive and related disk.” Andrea wanted to take a hammer to it right away, but Dean wanted to keep them as a “get out of jail free” card.
After a heated argument between the two, they agreed that brother-in-law Ernie would keep it until the two reached agreement. Before they left, Andrea asked Ernie to throw away a box or two each week in the garbage, which he did. The zip drive and disk were turned over to the U.S. Attorney by Dean and used in Fawell’s trial.
Ryan Accused of Lying to Federal Agents
The proffer offers the following details about Ryan statements in which the U.S. Attorney says, “Ryan lied to the FBI…”
January 5, 2000: Ryan told agents that he paid his own way to and expenses at Harry Klein’s Jamaica vacation home. In the same interview, Ryan said he has no knowledge of the South Holland driver’s license lease and did not personally take part. He also claimed no knowledge of the Joliet lease. Ryan also said he appointed Larry Warner to the McPier Board on the recommendation of an outgoing board member. Ryan further told the investigators that Dean Bauer had not told him of finding the briefcase of money and fundraising tickets at the Libertyville facility and that no one had in the SOS office had linked the ticket sales to improper licensing.
October 16, 2000: Ryan claimed he never had discussions with Warner regarding Warner’s interest in the Joliet lease or any SOS lease and that he had no personal knowledge of Warner’s having profited in any way from the Joliet lease. Ryan also is said to have lied about having no personal financial relationship with Warner.
February 5, 2001: “Ryan lied with respect to the four $500 checks given to him by Anthony De Santis. Ryan falsely claimed that he did not give De Santis the name of his son, nor did he write down the names or addressed of his son or his son’s wife and provide them to De Santis.” The proffer previously says the checks were cashed.
Conversations Among the Conspirators
· The outline of the case against Ryan and Warner provides snippets of conversations among the conspirators.
· “Boy, those guys are good,” was Warner’s reported reply to SOS employee Larry Stern when Stern called him in 2002 to tell him federal agents had asked him about the Viiasge stock purchase that Warner had suggested.
· About the turn of 2002, Warner called Udstuen, telling him “things were heating up.” They discussed the IBM deal. Udstuen said his cover story would be that he got paid for referring IBM to Warner.
· In 1999, when the Chicago Tribune ran a story about Warner’s hidden interest in various SOS leases, Udstuen called Drazek and told him he thought it likely that the money trail from Warner to Drazek to Udstuen would be uncovered. Udstuen returned $10,000 in cash to Drazek.
· On April 2, 2002, Udstuen met with Drazek at the O’Hare Marriott. They agreed to “stick to their false story that Drazek had kept all of the money paid by Warner and that Udstuen has received none of it.”
Warner was involved with other SOS vendors as well. One involved the digitalization of state drivers’ licenses. For 5% of total contract revenues, Warner agreed to represent Viiasge, a small Massachusetts company that had obtained Wisconsin’s business. Warner beat out lobbyist Al Ronan and Ronan’s wife, Catherine Adducci, who was a representative of Unisys.
Warner received $834,000 from Viiasge through November, 2002, when his contract was terminated, according to the Feds.
Three days before Warner reached his agreement with Viisage Vice President Yona Wieder at a luncheon set up by Chicago attorney Irwin Jahn, Ryan and Warner returned from a Los Vegas vacation, during which Ryan paid his $280 hotel bill in cash, the Feds say.
Ryan is alleged to have told Scott Fawell that he wanted lobbyist Ron Swanson to share in the financial benefits. “Warner was unhappy that Ryan wanted him to split some of his fees with (Ron) Swanson, Ryan’s long-time friend,” the document reads. Without doing anything, Swanson got $36,000 from Warner. Neither Warner nor Swanson registered as a lobbyist for Viiasge; only lawyer Jahn filed. Warner got Viiasge’s checks and turned one-third over to Jahn.
Viiasge went public in November, 1996, shortly before the Request for Proposal for the digital licenses was announced. In December, 1996, Warner bought 7000 shares for about $83,500. The next April, Warner tipped ”lifetime friend” Larry Stern, an SOS employee about the stock. Stern purchased 1400 shares. He, in turn, tipped his friend and supervisor Pat Spizzinocco, who also bought Viiasge stock. Both sold at a profit after the Illinois contract was announced.
“Stock records also show that at least two additional Warner friends, as well as Ryan’s son’s business partner, and the husband of Ryan’s niece purchased Viiasge stock during this time frame,” the document continues.
American Decal Manufacturing
Another Warner client was American Decal Manufacturing held. It produced the license plate renewal stickers. First awarded the contract during Ryan’s predecessor’s term, ADM was virtually guaranteed continuation of the business because of the way the bid specifications were drawn.
Not having had a lobbyist before, in mid-1991, its president Thomas O’Brien got “a call out of the blue” from Warner. Warner warned O’Brien that 3M, a potential competitor, has just hired former Governor Jim Thompson as its lobbyist, a statement that the document says was “untrue.” To keep the contract, $2000 a month would be required for Warner, it turned out. The fee later increased to $3000 a month and in 1994 to $5000 a month.
In August, 1991, the title laminates contract that 3M held came up. Warner is said to have approached O’Brien and asked for an additional $67,000 for getting ADM the contract. 3M lost the $250,000 per year business. 3M had previously refused to hire Warner.
Ryan is said to have personally intervened with James Covert, the head of his Vehicle Services Division, when Covert stopped returning Warner’s calls. Later, after the bid specifications were made generic in 1993, Ryan told Fawell and Roget Bickel, “I want this back,” referring to the language that favored ADM. Ryan got his way.
After Ryan left office, lobbyist Warner helped a Detroit firm, MRM, a group of former ADM employees.
Affordable Temperature Control
Still another vendor that alleged received the Warner touch was Affordable Temperature Control, a Chicago heating and plumbing contractor that had done work for Warner’s businesses, a fire insurance adjustment firm called Lash Warner & Associates, and Economy Building and Maintenance. Warned called its president, Michael Brodsky, and asked if he would be interested in a project in the Capitol complex.
A month later, in January 1992, Brodsky received a letter from Physical Services Director Larry Fletcher informing him that ATC had been awarded a contract to help design the temperature control system. Before being awarded the contract, “Brodsky had not spoken with anyone at the SOS Office regarding the contract,” the proffer says.
The document alleges that Warner called Brodsky seeking compensation, saying he expected “8-10% of ATC’s total revenues.” Brodsky agreed on 8%. In the sixteen-month period, Warner was paid $8,240 which the Feds say Brodsky “understood…were essentially a kickback to Warner for his assistance in getting ATC the contract.”
Fawell entered Warner’s name in his “Favors List” as the sponsor of ATC’s contract.
Modern Business Systems
Nadine Libertore was a sales person with Modern Business Systems when SOS Accounting Revenue Director Georgia Marsh steered her to “Warner, whom she said was very close to George Ryan and was somebody who was dealing with vendors trying to do business with the SOS.” Libertore thought that meant Warner was a state employee. Marsh gave her Warner’s office and home phone numbers.
When Libertore called Warner he said something like “I have his ear,” the proffer says. He said “he would require a fee of approximately $2,000 a month. Libertore was surprised by Warner’s request, as she had never been requested by anyone to pay a fee to be able to do business with a state agency.”
She told her supervisors and was advised to “give Warner the benefit of the doubt as to his intentions,” as the filing states.
After a meeting in which Warner re-iterated his seemingly non-negotiable $2,000 per month fee, Modern Business Systems decided not to do business with Warner.
Lease of 17 North State Street
Warner approached David Kalish, the manager of the building at 17 North State Street in Chicago, representing himself as a broker for the Secretary of State’s Office. If the SOS rented the building, Kalish would pay Warner a commission of 6% of gross income. Warner concealed his financial involvement in the deal, inserting another’s name—Adolph Ottaviani--in the brokerage agreement.
In 1991, a six-year lease was signed, which was renewed after Kalish met with Fawell in 1998. Warner made $383,276 in commissions, the Feds intend to prove.
The Bellwood Lease
After the State Street lease was signed, Warner met with Ryan and Fawell to discuss moving the SOS Police Department. Warner suggested an office in Bellwood. Fawell expressed his reservations about negative publicity that might result from Warner’s role in leasing property.
“Warner responded that no one would find out about Warner’s involvement because there were various layers of paperwork and Warner’s name was buried in the various layers. Ryan was present for the conversation,” reads the government’s case outline.
Subsequently, Warner called Physical Services Department Director Alex Nelson and said “words to the effect,” according to the document, “we’ve got a location we want you to look at to put the cops in.” He also told Nelson that Ryan would be calling him and that Nelson should not tell Ryan Warner had called Nelson.
“About fifteen minutes later, Nelson received a call from Ryan’s office, who told Nelson he was to check out 405 N. Manheim Road in Bellwood,” the filing reads. Nelson, who met Warner doing campaign outreach to the black community, did so and found the building suitable. A five-year lease resulted. While Bernard Leviton signed the lease on behalf of BL Manheim, he transferred total ownership to Warner after the lease signing. The lease was renewed for another five years. Warner received about $171,000 related to the lease. He used $75,000 of that amount “to facilitate a loan to Comguard, financially struggling company…in which Ryan’s brother, Tom Ryan, had an ownership interest,” the document states.
The Joliet Lease
Warner learned of the expiration of a lease for the Administrative Hearings Division before the end of 1994. Ryan called AHD Director Len Sherman and told him to call Warner about finding new space. Warner pointed him to 605 Maple Road in Joliet.
Sherman concluded that it would work, with rehab work, but had too much space. The government says Warner told Sherman that other SOS offices would be housed there, a fact he did not know.
Warned again told Fawell that his involvement would not be discovered. The Federal outline says Warner “had a ‘front man’ named (Jerome) Purze.”
Two SOS employees involved in lease negotiations, Tom Cuculich and Rob Kirk, dealt with Warner for 4-6 weeks and did not learn he had a financial interest in the building. After the lease was signed, Warner got a 90% ownership interest in the building. The proceeds Warner is said to have received are $387,500 for the first four years of the lease.
“In a conversation with Donald Udstuen, after Udstuen learned about Warner’s interest in the Joliet property, Warner told Udstuen he never should have done the Joliet lease, because it was ‘too good a deal,’ which Udstuen understood to mean that Werner had made so much money on the deal that it would raise questions about the propriety of his role in getting the lease,” the proffer states.
Warner Financial Benefits to George Ryan
The government outlines some of the evidence of gifts, payments and benefits to Ryan, his family, his staff while Ryan was Secretary of State:
· A 1994 $50,000 loan to Comguard, a financially struggling firm in which Ryan’s brother Tom had an ownership interest. The interest was converted to preferred stock and less than $6,000 was repaid.“As part of the conspiracy, Warner omitted all of the gifts and payments from his Lobbyist Registration Statements and Ryan omitted all Warner’s gifts and payments from his Statements of Economic Interests,” the government says it will prove.
· $11,326 of flood assistance in 1995 to Ryan’s daughter Lynda Fairman, carrying an unpaid account receivable of about $8,326 on his company’s books.
· Repair of Ryan’s roof in 1996 in which records indicate that Warner fronted the money and Ryan may have paid back a portion of the bill.
· Facilitating the purchase of stocks through Warner’s broker in 1996 and, in some instances, trading the same stocks in similar periods through the same broker. “One stock tip resulted in Ryan receiving $3,182 profit (100% on investment in matter of days,” the proffer reads.
· Waiving a standard adjustment fee of $1,040 on flood damage in Ryan’s Chicago apartment in 1996.
· Paying $3,185 in wedding expenses of Ryan’s daughter in 1997 within days of Viiasge being awarded the digital drivers license contract. (The proffer says Ryan’s own handwriting is on Warner’s checks.)
· Investing $6,000 in Ryan’s son Goerge, Jr.’s cigar business in 1997.
· Loaning Ryan son-in-law Michael Fairman $5,000 in 1997 with no record of repayment.
· Hosting numerous fund raisers for Citizens for Ryan in 1997 and 1998, one of which raised over $70,000; also helped arrange three “large campaign contributions through real estate entities with which he was affiliated.”
· Loaning $95,000 in 1997 to “essentially pay off an existing loan related to Comguard.”
· Gifts and other financial benefits while Ryan was Secr.0etary of state.
Ryan’s Relationship with, and Promotion of, Comguard
Comguard is a firm that monitored parolees on home confinement. Ryan’s brother Tom, a former mayor of Kankakee, was an original owner when it was founded in 1991-92. He sold the majority of his shares in 1999.
The government charges, “Throughout his term as Secretary of State and during the first year of his first year as Governor, defendant Ryan used his government offices to support and promote Comguard, while Warner advanced a total of approximately $145,000 in ‘loans’ for Comguard.”
When the company was in financial trouble, Warner is alleged to have bailed it out. This is mentioned at least three times in the government document, including a repayment to long-time Ryan friend Harry Lockman of $95,000 secretly paid to settle a complaint against Comguard by Kankakee County government. This $95,000 was repaid to Warner without interest.
Comguard held a contract with the Illinois Department of Corrections for 7 years, providing substandard service, according to the outline of the government’s case. When he became Governor, Ryan spoke with Don Snyder about electronic monitoring vendors in the Mansion after his first cabinet meeting. Ryan told Don Snyder that he “understood that one of the electronic monitoring vendors had a lower price and, that all else being equal, it would seem to make sense to use that vendor.” A footnote says that vendor was Comguard.
Ryan then told Director Snyder to just to do what was “best” for the Department, the relates.
When Tom Ryan sold most of his shares in 1999 and was paid about $155,000, two days later he wrote a $3,500 check to his brother with the notation “gift.” Ryan did not report the gift on his Statement of Economic Interests.
In March of 2000, a U.S. grand jury from the central Illinois jurisdiction subpoenaed records relating to Comguard.
Harry Klein South Holland Lease and Jamaica Vacations
Former appointed State Representative and George Ryan Labor Relations Board appointed Manny Hoffman introduced currency exchange chain owner Harry Klein to his friend George. From about 1993 through 2002, Ryan and his wife stayed as a guest at the Jamaican home of Harry Klein. Starting in 1994, Scott Fawell and his wife accompanied them through 2000. Hoffman, Klein and their wives were also there, the government reports.
On at least two occasions the two couples were guests at Klein’s Palm Springs, California, home.
The U.S. Attorney’s Office alleges that Ryan would write Klein a check for $1,000 for each week spent in Jamaica, but that Klein re-imbursed Ryan and Fawell in cash, which both accepted.
“Ryan agreed with these sham transactions,” the filing says, “because Ryan was concerned about how it would look if the press noticed that Ryan was a guest of Klein at the same time that the SOS office regulated the activities of currency exchanges…”
In about 1997, Klein brought up the possibility of renting a building in South Holland to the SOS while vacationing with the Ryans and Fawells. Upon returning to Illinois, both Fawell and Ryan talked to Driver Services Director Mike Chamness about leasing the building. Ryan, the government says, “instructed Chamness to work something out to use his building as a driver’s license facility, and he Chamness the phone number in Arizona where Klein could be reached.” He also told his employee that he, Ryan, wanted to be the one to tell Klein about the awarding of the lease.
Chamness decided to close the Lake Calumet office, although there were no plans to close it before Ryan called Chamness.
At a 1997 Bulls game, Klein thanked Ryan for the South Holland lease. According to the government, this angered Ryan, because Ryan wanted to be the one to tell Klein about the lease. Chamness got bawled out by Ryan the next day. Chamness later discussed outstanding issues concerning the lease with Ryan and Ryan is said to have directed they all be decided in Klein’s interest.
Trying to get out of hot water with Ryan, Chamness wrote a memo outlining the Secretary’s personal involvement in the lease. Ryan personally signed the lease, an unusual event in the Secretary of State’s Office.
Jim Esslinger, a SOS employee who reviewed the lease, estimated that the rent was $2-4 per square foot too high and that the parking lot was too small for commercial driver’s license (CDL) testing.
The Role of Lobbyist Ron Swanson
The government also outlines gifts, payments and benefits of longtime friend and lobbyist Ron Swanson.
Swanson admitted lying about a McPier official contacting him and about a law firm informing him they needed his lobbying assistance for McPier. The plea did not go deeply into the charges the government had leveled against Swanson. Swanson’s attorney has maintained that Swanson’s memory fails periodically.
Swanson’s gifts include:
· Paying about $2,500 for Disney World accommodations for the family of one of Ryan’s daughters in 1999.The government charges that part of the conspiracy was Swanson’s omission of all of this from his Lobbyist Registration Statements, and Ryan’s omission of them from his Statements of Economic Interests.
· Hosting the Ryans in 1995 at a Cancun, Mexico, condo.
· Providing money to Ryan to gamble in a Lake Tahoe gambling trip.
· Giving a $550 gift to Mrs. Ryan, which Swanson wrote off as a business expense.
· Giving Ryan and his wife numerous expensive gifts, including a St. John’s dress, a porcelain Limoge box, Cuban cigars, Llardo art, golf bags, cuff links and ornate figurines.
· Giving cash gifts to about 6 of Ryan’s employees during a 6-8 year period.
The government admits that Swanson has never admitted giving money to Ryan, but notes that, ”while Swanson was putting $4,000 into Udstuen’s pocket, for the Wisconsin Energy lobbying referral, he told Udstuen that he was also ‘taking care’ of Ryan.”
About $175,000 is also alleged to have been withdrawn from Swanson bank accounts from 1999 to 2001.
“The cash transactions are noteworthy, not just in their volume, but in their timing,” the government says. “Several coincide with Ryan’s birthday on Feb. 24, a date which is typically on Swanson’s calendar,” the proffer continues:
· For instance, On Feb. 24, 1998, Swanson withdrew $3,300 in cash.
· On Feb. 23, 2000, at approximately 2:30 PM , Swanson obtained $5,000 in cash. According to his calendar, Swanson say Ryan at 6 PM that night.
· On Feb. 21, 2002, Swanson assistant Kent De Lay obtained $3,000 in cash for Swanson at 10:30 AM. Swanson’s calendar reflects that he was “w/ the Governor @ Capitol” at 12:45 the same day.
How Ryan Helped Ron Swanson:
Lincoln Towers Lease,“As part of their corrupt relationship, Ryan took official action on numerous occasions to benefit Swanson,” the government charges.
Insider Information on Grayville Prison Selection,
Wisconsin Energy and McPier Lobbying Contracts,
Perks and Privileges
These include
Rental of Springfield’s Lincoln Towers at a rate that “far exceeded the normal price per square foot for comparable office space.” Although Ryan told Fawell that Swanson, its rental agent would not take a commission, Swanson got about $38,000.
Providing Swanson with inside information that Grayville had been selected for a prison site. Swanson entered into a $50,000 lobbying contract with businessmen headed by local booster Dr. Clyde Wilson.
“Swanson’s handling of the Grayville fee corroborates the evidence he was tipped off to Grayville’s selection as part of a corrupt relationship with Ryan,” the proffer charges. “Swanson deposited the $50,000 fee he had received from Dr. Wilson on or about March 12, 2001. Thereafter, on March 26, 2001, two sequential checks for $7,000 and $8,000 made payable to Swanson were written on his account. The first, for $7,000, was cashed on March 28, 2001. Swanson’s calendar reflects a meeting with Ryan on Marcy 29, 2001 at 11:30 AM. The second, for $8,000, was cashed by Swanson’s secretary for him on April 4, 2001.”
A footnote says, “In late May of 2001, Swanson duplicated the March transaction by structuring another $15,000 cash withdrawal into $7,000 and $8,000 transactions. Thus, in approximately a sixty day period after receiving the $50,000 fee, Swanson received $30,000 in cash.”
The email notifying the Corrections Department of Grayville’s selection was sent April 10th. At the public announcement on April 12th Ryan, at Swanson’s request, publicly acknowledged Dr. Wilson’s efforts in promoting Grayville’s selection.
When Wisconsin Energy was seeking an Illinois lobbyist in 1999, Nick Hurtgen asked Don Udstuen’s advice. The government says that Udstuen conferred with Ryan and Ryan suggested Swanson. He was hired.
(Hurtgen was identified in a whistle-blowing suit filed by Naperville’s Edward Hospital. In the alleged scheme, Janesville’s Mercy Health Systems was assured it would receive a permit to build a new hospital in Crystal Lake, if its financing were through Bear Stearn. Hurtgren was the head of the firm’s Chicago office before he resigned.)
Swanson then solicited another member of Ryan’s “kitchen cabinet,” former State Rep. Pete Peters (R-Chicago) to assist with the lobbying. Peters, as exclusively reported in Illinois Leader [http://www.illinoisleader.com/news/newsview.asp?c=6580], was given a sweet heart job in Ryan’s Secretary of State’s Office for 4½ weeks over a thirteen month period during 1991-92 to increase his legislative pension. The pension started at $51,000 and has increased, as do all state pensions, by 3% a year since then. Peters was also appointed by Ryan to a $25,000 per year sinecure as chairman of the Illinois Clean Energy Community Foundation.
Swanson put $4,000 into Udstuen’s pocket I the men’s room of a downtown Chicago restaurant for making the referral, the government says.
When Scott Fawell was appointed head of McPier by Ryan called him and told him to hire Swanson as a lobbyist on behalf of the McCormick Place expansion project, according to the proffer. Ryan told his former chief of staff that Swanson was to be paid $5,000 a month. Roger Kiley of the law firm Mayer, Brown and Platt agreed to take Swanson on, but said his firm’s fee would increase by $5,000 a month.
Under the heading of “Perks and Privileges,” the government lists the following bestowed by Ryan:
· Full use of the ante-room next to Ryan’s governmental office (“he often loitered there, carrying on his lobbying business with unrestricted access to Ryan and Ryan’s staff”).
· Government jobs for Swanson’s son and associates.
· Free parking in the Capitol complex, even though Swanson held no governmental position.
Awarding Low-Digit License Plate Numbers
to Those Providing Campaign or Personal Benefits
Rewarding campaign supporters with low-digit license plates is a time-honored tradition in the Secretary of State’s Office. In outlining its case, there are echoes of what people said that Paul Powell did when he was Secretary of State. While checks for license plate renewal are no longer written to the occupant of the office—as they were in Powell’s time—issuance of the low-numbered plates are certainly not random.
The government alleges that Warner advised Ryan that he had to keep track of the low-numbered plates. Warner referred to them as “plums.”
From 1991-1999, “Ryan personally approved the award of the most coveted low-digit plates, and many were awarded to Warner and many were awarded to Warner’s acquaintances and business associates,” the filing states.
Those specifically mentioned include
· Robert Casey, whom Ryan called in 1990 asking “as a friend” for $75,000 to run television ads. Casey called a friend who loaned the money, which was repaid shortly after the election. Ryan wrote Casey a personal note saying, “Words are sometimes inadequate to express appreciation and thanks to friends. But until I can do better, words are it.” Ryan offered both Casey and his friend low-digit license plates, which they accepted. Casey is believed to be the same Robert F. Casey who served briefly as state representative with Ryan in 1979-80 and, previously, from 1957-61. If so, he also served as interim Kane County State’s Attorney in 1988 and was named administration for the Illinois Gaming Board during Ryan’s term as Governor.
· Anthony De Santos, owner of Drury Lane Theaters, is said by the Feds to have told Ryan in 1997 that he wanted to contribute $2,000 for his gubernatorial campaign, but didn’t want to write a check for more than $500 because he did not want to be listed on disclosure forms. (Illinois requires disclosure of all contributions over $150. Those $500 and above have to be reported within two days in the last 30 days of a campaign.) The government says that Ryan suggested he make out four checks of $500 apiece to himself, his wife, his son and his daughter-in-law and mail them to him, which De Santos did. Subsequently, he wrote another $500 check to Ryan in December and $500 checks to Ryan and his wife in 1998. All were cashed, the proffer says. Ryan did not declare any of the money as gifts, until he learned that the government had discovered them. Then, he amended his income disclosure forms. De Santos was offered plate number 217 three weeks after the 1998 December checks arrived. He accepted the offer.
· Larry Warner’s friends: Warner was influential is the issuance of so many low-digit plates that he established a “kitty” in one of Ryan’s secretary’s desks to pay for plates without delay. Warner would ask Ryan’s staff to look up specific numbers. Warner would often know before Ryan of the availability of low numbers. The government says that while Ryan was Secretary of State that Warner designated the recipient of over 90 low-digit plates. One of the earliest in 1991 was to Jim O’Brien of American Decal Manufacturing.
Disbanding the Inspector General Department
George Ryan’s attitude toward corruption in his Secretary of State’s Office may be summed up in an uncorroborated statement made to Cook County State’s Attorney Jack O’Malley (now Appellate Court Justice from McHenry County): “Fuck you, Jack. These are my guys.”
The statement was supposedly made in the presence of his Assistant State’s Attorney for Public Integrity Patrick Quinn, who apparently vividly remembers the meeting. O’Malley, according to the proffer, does not. Quinn associates, however, remember his having told them about the incident.
It happened about May, 1992, right before a press conference in which O’Malley was to announce indictments relating to the fraudulent issuance of drivers’ licenses by the manager of the Midlothian office.
“Quinn said he was stunned by the import of the statement—that Ryan’s political people were not to be touched,” is the way the proffer puts it.
The confrontation was an early indication of what the government says that Ryan, using Fawell as implementer, did to the Secretary of State’s Office. Fawell “put in place a fundraising and political structure to in order to raise funds on behalf of Ryan for his re-election or possible run for higher office,” the government’s outline of evidence reads. “Under this system, some SOS employees were in charge of fundraising activities and other SOS employees were strictly political operatives, with little or no government responsibilities. Some did both…Fawell kept Ryan appraised as to which employees had helped raise money for Citizens For Ryan and which employees were political operatives within the SOS Office.”
As has been outlined numerous times in open court in the Safe Road Investigation, fundraising tickets were distributed to employees and they were expected to sell their quota or eat them. If ticket sales were slow in a given department, Fawell was informed and applied the hammer. Star sales people were rewarded with photo ops with the Secretary himself at “thank you” luncheons which, the Feds say were typically at least partially on state time. Some type of “pretextual government meeting” would be called to get the employees to where the luncheon was being held.
But, the super salesmen got more than a photograph with the boss. The government says they got raises and promotions for their political activity. Fawell is expected to testify that he met with CFR officials to discuss who deserved taxpayer-paid rewards. Ryan signed off on the results, the document says.
Ryan’s Inspector General’s Office had investigated and exposed the fundraising scheme at least four of the drivers’ license stations:
Midlothian:
The only tidbit offered in the government’s outline of evidence is the interchange between Ryan and O’Malley. Ryan’s “mind your own business” expletive response came after O’Malley and Quinn discussed the opportunities for further SOS prosecutions.
Libertyville:
A raid on the Libertyville facility was conducted by the Inspector General’s agents and Lake County officials in March, 1993. A prior investigation had found SOS employees selling driver’s licenses to illegal aliens. During the raid, investigators found $2,500, CFR fundraising tickets and an accounting of ticket sales in an open briefcase in James Quinn’s office.
Dean Bauer was shown what was found and called Ryan from Quinn’s office. Bauer apparently told government officials that Ryan “didn’t like surprises” and that the briefcase was the kind of thing that Ryan would want to know about.
The evidence was logged in, but four years later, in 1997, Inspector General Dean Bauer took the contents out of evidence and they were never seen again, according to a footnote.
Bauer was the first close associate of Ryan to be convicted in the Safe Road Investigation.
In an article published May 10, 2000, Ryan told a Medill Journalism School student:
"It's been going on for years. It's probably going on right now, as we talk," he said. The ideal of ending corruption entirely "is kind of like having a perfect system of justice for the death penalty. . . . The temptations are there, and people are weak on some occasions."
Bode asked whether the corruption had been "news to you" when the federal investigation began. Ryan said his office constantly had investigated the issue and had run sting operations, although he had had no idea that funds allegedly were being diverted into his campaign coffers
"We took a lot of actions and did a lot of investigations," he said. "I don't know what more we could have done. The hindsight's great. People say, 'You should have done this,' or 'You should have done that.' "
While some of the money may have landed in his campaign coffers, those running the bribery scheme "for the most part put that money into their pockets," Ryan asserted. To say they were helping his gubernatorial campaign "was kind of a good excuse for them. All of that money didn't come into the George Ryan campaign fund."
After Deputy Inspector General Joseph Jech’s interviewed Deb Dittmer, CFR Finance Director, she immediately interviewed called Fawell. Conferring with Richard Juliano, who pled guilty in April, 2002, to a single count of mail fraud in connection with being on the state payroll while doing a political job, Fawell is said to have “told Juliano that he was going to talk to Roger Bickel to have Jech ‘reigned in.’”
The document says that Fawell was with Ryan on the day of the Libertyville raid. Further, that he convinced Ryan to fly to Libertyville for damage control purposes. While there, Ryan and Fawell were told the raid had centered around fundraising issues and the selling of tickets.
Naperville:
A year after the Libertyville raid, Senate President Pate Philip enters the picture when Russell Nisivaco, manager of the Naperville facility, got into trouble with the IG’s Office when $2,600 in cash receipts did not show up at the bank just weeks before a Ryan spring fundraiser. Agents Russell Sonneveld and Ed Hammer didn’t originally suspect the fundraising connection, but after Nisivaco took and failed a polygraph exam, under questioning, Nisivaco admitted “feeling pressure to sell the tickets, but continued to deny wrongdoing,” the document continues.
After the polygraph test, Nisivaco went home and wrote his political sponsor, who happened to be Philip. He told Philip that he was a Naperville Republican precinct committeeman and wanted to keep his job. The final sentence of his letter read, “The last thing I want is to cause any negative events to hurt our party. Please allow me to continue my employment with the Secretary of State’s Office.”
“Shortly after this,” the proffer says, “Philip contacted Ryan to find out what was going on in the investigation. Ryan then called Bauer and asked the same question. Bauer did not know the circumstances of the investigation, and Ryan told Bauer to find out what was going on.”
Ryan got a private telephone briefing from agent Sonneveld. “Ryan did not express any particular opinion,” the outline says. Sonneveld filled Hammer in on the conversation and, when he returned to the office, Bauer asked for separate memos from both, took them and the disk and told them “to do no further work on the case.” The case was later closed. The proffer notes that the disk was found in Bauer’s desk after he left office in 1999.
The Guzman Case
Agent Sonneveld got on the case when he read that an Illinois licensed truck driver involved in a Milwaukee accident which killed the six Willis children in November, 1994, could not speak English. He pulled tuck driver Ricardo Guzman’s driving record. They showed he has obtained his Commercial Drivers License (CDL) at the McCook Facility from employee Marion Seibel in 1992. “Sonneveld had received previous complaints about alleged misconduct by Seibel,” the proffer states. From previous investigations, Sonneveld knew that Seibel was “heavy” with Ryan’s fundraising apparatus.
On his own, Sonneveld contacted Wisconsin authorities and, then, telling Bauer what he had done, asked Bauer’s permission to open a case. “Bauer told him not to open a case and to let the Wisconsin authorities handle it.” (The proffer underlines the word “not,” the only place in the document underlining occurs.)
Sonneveld press Bauer, telling him that Wisconsin authorities knew nothing of Seibel and McCook. Bauer stood firm. Virtually concurrently, Bauer was telling another SOS official that an official investigation of Guzman was taking place, the filing says.
Bauer was, of course, acting with the knowledge that Ryan gubernatorial opponent Glenn Poshard ran slashing television ads connecting Ryan to the Willis accident.
Fawell’s Communications with Ryan about Disbanding the Inspector General’s Office
It takes three pages for the U.S. Attorney to tell about how Fawell and Ryan talked about disbanding the Inspector General’s Office.
Fawell, with Ryan’s approval, was trying to disband the Inspector General’s Office at the end of 1994 and the beginning of 1995. Part of the reason was the persistent inquiries into investigate Ryan’s campaign fundraising efforts. One memo to Ryan suggests keeping Bauer as Inspector General, but striping him of his staff. The December memo stated Ryan needed to get “someone in there who won’t screw our friends, won’t ask about FR (fundraising) tickets, and who will run a no-nonsense shop. Someone tough has to go in there and get the investigators to no longer freelance as they see fit.”
In discussing the memo with Ryan, “Fawell noted that Ryan was well aware that the IG investigators were posing a problem to the CFR fundraising apparatus by their persistent inquiries into ticket sales, and that they were not paying any attention or taking any direction from Bauer,” the proffer says. “Ryan approved Fawell’s proposal to disband the IG office.”
They also decided to “abolish” Deputy Inspector Jech’s position and transfer the agents who were “trouble” to other duties. A dispute between the SOS Police Department Director Jack Pecoraro and Bauer, with Bauer complaining he was being cut out of the picture resulted in a re-constitution of the Inspector General’s Office.
So, Fawell, along with Juliano, began discussing downsizing the Inspector General’s Office. The words Fawell used were “you can’t trusts those fucks anyway.”
On Feb. 17, 1995, Fawell summoned Jech to an unscheduled meeting at his office. He told Jech that his employment would be terminated for budgetary reasons, asked for and received a resignation letter. At the end of May all IG special agents were transferred or fired. Duties and Bauer, still with his title, were transferred to the SOS Police Department.
Taxpayer-Subsidized Campaigns
A litany of diversions of taxpayer-paid resources in the outline of evidence just skims the surface of how George Ryan intervened in campaigns. In the description of the government’s case are
· Ryan’s 1994 re-election campaign for Secretary of State,Ryan’s 1994 Re-election Campaign for Secretary of State
· Ryan’s 1998 gubernatorial campaign,
· Phil Gramm’s 1996 presidential campaign,
· the 1996 effort to retain GOP control of the Illinois House for Speaker Lee Daniels,
· Scott Fawell’s mother’s 1994 re-nomination campaign for state senate, and
· Ryan’s nephew’s 1992 campaign for state representative in Kankakee.
Scott Fawell and Rich Juliano started meeting in early 1993 to discuss how to get Ryan re-elected Secretary of State. They discussed personnel needs for field operations, phone banking, passing candidate petitions, precinct walking, marching in parades, and attending campaign events, among other things. The government says that most of their preliminary discussions took place “on state time.”
The state was divided between the Chicago metropolitan area and Downstate, then, further parceled into zones and, finally, regions. “For both the 1994 and 1998 elections, virtually every regional manager, zone manager and area coordinator was an SOS Office employee,” the filing says.
In mid-1994, a handful of SOS employees, including Juliano, left the state payroll to be employed by Citizens for Ryan. “However, with the exception of these handful of individuals, the SOS/CFR coordinators remained full-time SOS Office employees and continued to perform campaign work on state time,” the proffer states. Even Fawell, who is said to have done substantial campaign work each day, continued to receive his state paycheck.
The government intends to prove that substantial campaign work was done on state time between the fall of 1993 and the 1994 eleciton “with both the explicit and implicit authorization of Ryan, Fawell, Juliano and others.”
Ryan’s 1998 Campaign for Governor
The Ryan for Governor campaign was on hold until Governor Jim Edgar announced his retirement in the summer of 1997. Immediately, Fawell started contacting people he wanted to get involved. One of the first was Juliano, who was now working for a law firm earning about $6,000 a month. Fawell agreed to match that salary for September out of CFR funds. The proffer relates how Fawell told Juliano he could not afford to pay him with campaign funds, but would get him a contract with the Secretary of State’s Office “which would compensate him for his campaign efforts. Juliano agreed to participate in the fraudulent arrangement.” He got paid $5,000 a month. “From approximately October, 1997, toin or about early February, 1998, Juliano performed exclusively campaign-related work, but was paid approximately $22,500 from the SOS Office.”
One of Juliano’s first jobs after being hired by CFR was to set up a schedule, with Fawell’s approval, of SOS employees who would be transferred to the CFR payroll during the campaign. The two discussed a plan to move employees over on a rotating basis. The project payroll was too much for the campaign to handle, according to the Feds. The money was needed for end-of-campaign advertising. The SOS employees, nevertheless, began to work on the campaign “on state time, while being paid by the SOS Office.”
Close campaign advisor Udstuen advised Ryan in the fall of 1997 that Fawell needed to be taken off the state payroll. The proffer relates, “Ryan agreed….Nonetheless, Fawell was not taken off the SOS payroll until February, 1998.”
(Parenthetically, it should be noted that both Udstuen and Fawell have cut deals with the U.S. Attorney’s Office.)
Starting about a month before the March primary election, numerous employees were working “virtually full-time” for the campaign, even though their time sheets showed they were spending 75% of their time doing state work. Certain employees, like new-hired Assistant Secretary of State Glen Bower, who served in the Illinois House with Ryan, were concerned with the absences.
Fawell faxed Bower a memo “articulating the scheme to divert certain SOS employees and resources and to conceal the diversion. For example, speaking of the Diverted Employees, Fawell stated “they are all leaving their (SOS) spaces ‘lived in’…when any calls come in they should take a message—say the person is out at a meeting.”
Several memos the Feds call “window dressing” were issued by Ryan during the campaign warning that fundraising efforts were not to be conducted for Ryan on state time.
The proffer says that “Ryan learned early in the1998 campaign about the dispute between Fawell and Bower. Rather than chastising or admonishing Fawell, Ryan told Fawell to ‘work it out’ and handle whatever issues Fawell had with Bower so that Ryan would not be bothered. Ryan’s cavalier approach to the issue reinforced longstanding policy by Ryan and CFR that the ends justified the means in terms of diverting state employees for campaign work.”
Bower, an attorney and former head of the Federal Railroad Adminstration, is cooperating with Federal authorities and testified in Fawell’s trial. It is perhaps worth noting that Federal law on workplace ethics is significantly stronger than state law.
In a spring meeting Fawell called with high-ranking campaign and SOS officials, “Fawell made it clear that CFR would continue to divert SOS resources as necessary for the campaign, notwithstanding Bower’s opposition. Bower again voiced objection and raised the specter of ‘ghost payrolling’ prosecution if Fawell continued his diversionary efforts to benefit CFR. Bower told Fawell that, “several blocks from here” (a reference to the Federal building), there was a ghost payrolling investigation going on (a reference to the Haunted Hall prosecutions) and that Fawell was headed in that direction.
“Fawell dismissed Bower’s concerns, telling Bower that ‘the people who are working over here taken that risk’ and that, in any event, ‘the campaign cannot afford to have these people on the payroll full-time.”
The proffer also talks of discussions about “how the campaign would make use of state cars, phones, supplies and parking spots to reduce expenditures” for the campaign. After the meeting, however, Fawell and his assistant, now finance Andrea (Coutretsis) Prokos—with Juliano’s knowledge—“authorized the falsification of time sheets and logging on to state computers (for employees actually at CFR) to mask that employees were working at CFR offices on state time.”
This deception continued until three months before the election, the Feds say, when Fawell authorized the putting the diverted Secretary of State’s employees on the campaign payroll.
U.S. Senator Phil Gramm’s 1996 Presidential Primary Campaign
Ryan decided to endorse Texas U.S. Senator Phil Gramm in the 1996 presidential election. He headed his Illinois campaign. Meeting in the spring of 1995, Ryan, Fawell and Juliano agree, according to the proffer, that they all could make some money for their efforts on Gramm’s behalf, but that the money could not come directly. They didn’t want Gramm to find out. Ryan, according to the document, called Udstuen. Udstuen, following his money-laundering path with IBM lobbyist Larry Warner, made arrangements with Alan Drazek to disguise who got what by using his company American Management Resources. Udstuen suggested, and the three agreed, to give a cut to Drazek.
Both Juliano and Fawell set up consulting companies and the Gramm campaign signed a contract with Drazek. “Ryan instructed Fawell that his cut of the money should go to his (Ryan’s) adult children…
Ryan asked that his first payment of the Gramm proceeds go to his daughter, Lynda Fairman,” the proffer says. Juliano was the intermediary who dealt with the Ryan children and Drazek. The government claims that none of the children did any work for the Gramm campaign, but notes that one or more of Ryan’s daughters “claim that they may have done a nominal amount of work…a claim…contradicted by Juliano and Fawell, who oversaw the Gramm effort in Illinois.”The same field organization put in place for the 1994 re-election campaign was used for Gramm. 40 or more showed up on a workday to have their pictures taken with Gramm and Ryan, the document says. Before Gramm pulled in February, 1996, the U.S. Attorney claims that “significant efforts” were made by Ryan’s crew on Gramm’s behalf, “much of which occurred on state time using state resources.” The work included organizing busloads to work in the Iowa straw poll, phone banking, advance work for Gramm, and circulating petitions for the candidate.
“A substantial portion of this Gramm campaign work took place on state time,” the paper says.
Beginning in the summer of 1995, monthly payments were made to Drazek’s AMR. Because of the structuring of the payments that flowed through AMR to Juliano, Fawell and Ryan’s children, none of the over $33,000 showed up on Federal Election Commission records.
Ryan is said to have omitted the payments from his 1995 and 1996 Statements of Economic Interest forms, as well as from his “original and amended 1995 and 1996 federal and state income tax forms. In the wake of publicity concerning the benefits he had received from the Gramm campaign, Ryan filed second amended tax returns for 1995 and 1996 in which he made false and misleading statements to the IRS claiming that it was the Gramm campaign’s idea to pay Ryan for his role in the Gramm campaign.”
Lee Daniels Named in 1996 Deal with Ryan to Maintain House GOP Majority
For the first time, the name of State Rep. Lee Daniels (R-Elmhurst) and one of his political action committees, the House Republican Campaign Committee (HRCC) appear in a federal document. If mentioned in any previous filing, he was identified by some pseudonym, such as, “Official One.”
The proffer says, “In the Summer of 1996, George Ryan and then Speaker Lee Daniels agreed that Ryan would dedicate selected SOS/CFR coordinators to support Daniels in his attempt to keep Republican control of the Illinois House.”
Fawell summoned his supervising coordinators to a meeting at the State of Illinois building to outline the deal and discuss how it should be implemented. Fawell also indicated that the staff would probably be paid for its political work this time. Coordinators were eventually assigned to specific House races.
“In furtherance of the Ryan-Daniels’ accord,” the proffer says, “Fawell also discussed and arranged with Jack Dorgan, Daniels’ principal representative at the House Republican Campaign Committee, that Fawell’s SOS/CFR people would be compensated for their efforts. (Dorgan is now a village trustee in Rosemont.) Fawell then drafted a document that listed each of the individual SOS/CFR coordinators who were to be assigned to targeted House races, the race they were assigned and the amount of money they were to receive.
“This document was then provided,” the proffer continues,” to Roger Stanley, a Fawell associate and HRCC ally, who agreed to make payments to Fawell’s people from a business account at Stanley’s direct mail company, Unistat. By using Unistat, a private company, as a conduit for the payments, Fawell and his SOS/CFR coordinators avoided identification and disclosure on campaign expenditure disclosure forms (‘D-2’s’) relating to the payments made to these full-time SOS Office employees who were working on the 1996 HRCC races.”
The Ryan-Daniels’ section concludes that “a significant amount of their campaign work for these races” was done “on state time.”
The proffer merely hints--like the tip of an iceberg-at how much state resources were used for overt political purposes by Ryan and Daniels
It is worth noting that the source of the money being used for payment would also go unreported. Presumably it came from the HRCC, but the proffer does not say so.
Illinois Leader has previously revealed that Daniels used legislative assistants to work on behalf of the 1996 re-nomination of State Rep. Ann Hughes (R-Woodstock) when she was challenged for the 3rd time by Steven Robert Verr of McHenry. [http://illinoisleader.com/news/newsview.asp?c=6102] This was an election in which a fake taxpayers’ group was set up to endorse candidates opposed by Jim Tobin’s National Taxpayers United of Illinois, which endorsed Verr in the 1996 primary election. The Daniels’ forces used the same Stanley firm mentioned in the Ryan-Daniels deal during the summer of 1996. Named in the memo obtained by Illinois Leader are Daniels’ employees who worked on state time.
Scott Fawell’s Mother’s 1994 Re-nomination Campaign for State Senate
When Scott Fawell became Secretary of State George Ryan’s top assistant, his mother Bev was already in the State Senate. In 1994, she was challenged by DuPage County Board member Michael Formento.
A negative February media report spurred her son to convene a meeting “to save Bev,” as the proffer puts it. “Fawell directed that the assembled SOS Office employees provide Sen. Fawell's campaign comprehensive campaign assistance, including press relations assistance (Torre), opposition research (Shapo), fundraising (Twiss) and polling services and related phone banking activity (Juliano), among other things. The fundraising efforts directed by Fawell included the distribution of his mother's campaign tickets throughout the SOS Office ticket distribution process (which process is described herein).
“After the meeting, and at Fawell's direction, Fawell's SOS Office team went about the business of assisting Sen. Fawell's campaign as Fawell had outlined. Fawell's SOS Office team performed substantial portions of the campaign activity on state time.
“In addition, as the election drew near,” the proffer continues, “additional SOS Office employees were directed to conduct campaign work for Sen. Fawell on state time. For example, in and around the primary election day, SOS Office employees (including Christopher Frerichs) working out of the executive offices in Chicago were directed, during the work day, to go to work at a phone bank at a Wheaton, Illinois law office to support Sen. Fawell.
Ryan’s Nephew-in-law’s 1992 Campaign for State Representative in Kankakee
Ryan’s first foray using SOS staff resources is alleged to have been helping his nephew Bruce Clark will his old state rep seat in Kankakee County. Clark was married to Ryan’s niece and worked for the SOS.
In the fall of 1991, Ryan attended a meeting with Clark, Juliano and other high level Republicans to discuss Clark’s potential candidacy. When Clark made up his mind to run, the document says, “Scott Fawell and other SOS officials, working on behalf of CFR under defendant Ryan’s authority, committed to assisting the 1992 campaign efforts of Clark….Fawell told SOS employee Brad Roseberry and other SOS employees” that they would be working on Clark’s campaign.
Although a Chicago-based employee, Roseberry was assigned to coordinate the Clark campaign, “spending substantial portions of his governmental time in the months leading up to the November election in the Kankakee area performing campaign functions.
Within two months of the election, he filing reveals, Roseberry was ordered immediately back to a meeting in Chicago. The meeting “took place in Ryan’s Chicago office during regular business hours.”
“At the meeting Ryan requested an update and overview of Roseberry’s activities on Clark’s campaign.”
After Roseberry did so, “one of the participants recommended that they should move Roseberry off the SOS payroll in the remaining weeks before the election. Fawell responded no, that they would not be changing Roseberry’s work status…Roseberry continued to work virtually full-time for the Clark campaign through the election, even though he remained on the SOS Office payroll as a full-time employee,” the proffer concluded.
Obstruction and Concealment
Two months before the 1998 gubernatorial election and several days after the Melrose Park drivers’ license facility had been raided, SOS employee Bill Mack had a phone call with Fawell. Mack, who had an office near the executive offices, was told by Fawell that “he had a concern about SOS employees having campaign-related material in their work areas,…that these individuals would need to get rid of these campaign materials immediately,” according to the court filing.
A short time after that, “Mack recalls seeing Fawell and George Ryan at the Chicago SOS office,” the document continues. “Fawell was standing to one side of the office while Ryan was sitting on a couch and reading a document. Ryan then went over to where Fawell was standing and the two talked privately…, and then Ryan returned to the couch.
“Fawell,” it continued, “then repeated that he wanted Mack to contact everyone on the fifth floor of the SOS office to determine what campaign-related documents were located on the premises and make sure that such documents and materials were immediately destroyed. Fawell again made it a point of advising Mack that there could be some type of raid by federal authorities occurring as early as the following Friday, September 11.
“After Fawell made his remarks to Mack, he turned to Ryan, who remained seated on the couch and said to Ryan words to the effect of ‘hey, George, I told Bill to go around and tell people to get stuff out of their offices.’ After Fawell made this comment, Ryan abruptly got up from the couch and left the office.”
Following Ryan and Fawell out of the office, Mack saw the two “stop and speak privately for approximately one to two minutes within the reception area outside of Fawell’s old office,” the paper continues.
A footnote says that Fawell does not remember the meeting being in the Thompson Center and “believes, if it occurred, would more likely have been at the offices of the CFR.”
Mack then conveyed Fawell’s request to those still in the office and recruited CFR employees to assist. Brought to the shredder, according to the proffer, were
· Campaign press releases,The 3-6 hour search resulted in 8-12 bags of shredded materials, which were taken to the dumpster area. After cleaning up, Mack called Andrea Coutretsis at campaign headquarters “and told her they were done shredding.” She indicated she would pass the message along to Fawell.
· SOS schedules,
· Low-digit license plate request forms,
· Campaign volunteer lists,
· Weekly campaign update reports,
· Campaign disclosure reports, and
· Other general campaign materials.
Within a couple of days, “Mack also reported to Ryan that the fifth floor had been cleaned up,” it continues. “Ryan made no response, but also gave no indication that he did not understand what Mack was talking about.”
A second round of shredding happened in October of 1999, when Dean Prokos got a phone call from his now ex-wife Andrea Coutretsis Prokos. By then working for McPier with Fawell, she requested her husband’s assistance in removing boxes from the campaign office. When she brought them home, he helped unloaded them and put them in their Woodridge home’s basement. Andrea told Dean that the Fawell had told her to get rid of the documents and that they could get a lot of people in trouble, the proffer says. The boxes remained untouched for months until Andrea told Dean a subpoena or search warrant was likely because she worked for Fawell.
On October 30 1999, the two took the boxes to Dean’s sister and brother-in-law’s. The talked with Ernie and Frances Katris about getting rid of the documents in their basement. They started using a shredder in the basement, but it was deemed unsatisfactory because it did not cross cut the paper. After discussing disposal methods, they settled on using the now infamous barbeque grill. [See Illinois Leader cartoon.]
It didn’t work, so they decided to leave them in the Katris’ basement.
Before finishing their work that day, “they came upon a computer zip drive and related disk.” Andrea wanted to take a hammer to it right away, but Dean wanted to keep them as a “get out of jail free” card.
After a heated argument between the two, they agreed that brother-in-law Ernie would keep it until the two reached agreement. Before they left, Andrea asked Ernie to throw away a box or two each week in the garbage, which he did. The zip drive and disk were turned over to the U.S. Attorney by Dean and used in Fawell’s trial.
Ryan Accused of Lying to Federal Agents
The proffer offers the following details about Ryan statements in which the U.S. Attorney says, “Ryan lied to the FBI…”
January 5, 2000: Ryan told agents that he paid his own way to and expenses at Harry Klein’s Jamaica vacation home. In the same interview, Ryan said he has no knowledge of the South Holland driver’s license lease and did not personally take part. He also claimed no knowledge of the Joliet lease. Ryan also said he appointed Larry Warner to the McPier Board on the recommendation of an outgoing board member. Ryan further told the investigators that Dean Bauer had not told him of finding the briefcase of money and fundraising tickets at the Libertyville facility and that no one had in the SOS office had linked the ticket sales to improper licensing.
October 16, 2000: Ryan claimed he never had discussions with Warner regarding Warner’s interest in the Joliet lease or any SOS lease and that he had no personal knowledge of Warner’s having profited in any way from the Joliet lease. Ryan also is said to have lied about having no personal financial relationship with Warner.
February 5, 2001: “Ryan lied with respect to the four $500 checks given to him by Anthony De Santis. Ryan falsely claimed that he did not give De Santis the name of his son, nor did he write down the names or addressed of his son or his son’s wife and provide them to De Santis.” The proffer previously says the checks were cashed.
Conversations Among the Conspirators
· The outline of the case against Ryan and Warner provides snippets of conversations among the conspirators.
· “Boy, those guys are good,” was Warner’s reported reply to SOS employee Larry Stern when Stern called him in 2002 to tell him federal agents had asked him about the Viiasge stock purchase that Warner had suggested.
· About the turn of 2002, Warner called Udstuen, telling him “things were heating up.” They discussed the IBM deal. Udstuen said his cover story would be that he got paid for referring IBM to Warner.
· In 1999, when the Chicago Tribune ran a story about Warner’s hidden interest in various SOS leases, Udstuen called Drazek and told him he thought it likely that the money trail from Warner to Drazek to Udstuen would be uncovered. Udstuen returned $10,000 in cash to Drazek.
· On April 2, 2002, Udstuen met with Drazek at the O’Hare Marriott. They agreed to “stick to their false story that Drazek had kept all of the money paid by Warner and that Udstuen has received none of it.”
Labels: Al Ronan, Catherine Adducci, Don Snyder, Don Udstuen, George Ryan, George Ryan Jr., Irwin Jahn, Jim Thompson, Larry Warner, Roger Bickel, Ron Swanson, Scott Fawell, Tom Ryan, Viiasge
