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Secret Tapes Helped Build Graft Cases In Illinois
Hospital CEO Reported Shakedown, Wore Wire

By Carrie Johnson and Kimberly Kindy
Washington Post Staff Writers
Monday, December 22, 2008

CHICAGO -- The wide-ranging public corruption probe that led to the arrest of Illinois Gov. Rod Blagojevich got its first big break when a grandmother of six walked into a breakfast meeting with shakedown artists wearing an FBI wire.

Pamela Meyer Davis had been trying to win approval from a state health planning board for an expansion of Edward Hospital, the facility she runs in a Chicago suburb, but she realized that the only way to prevail was to retain a politically connected construction company and a specific investment house. Instead of succumbing to those demands, she went to the FBI and U.S. Attorney Patrick J. Fitzgerald in late 2003 and agreed to secretly record conversations about the project.

Her tapes led investigators down a twisted path of corruption that over five years has ensnared a collection of behind-the-scenes figures in Illinois government, including Joseph Cari Jr., a former Democratic National Committee member, and disgraced businessman Antoin "Tony" Rezko.

On Dec. 9, that path wound up at the governor's doorstep. Another set of wiretaps suggested that Blagojevich was seeking to capitalize on the chance to fill the Senate seat just vacated by President-elect Barack Obama.

Many of the developments in Operation Board Games never attracted national headlines. They involved expert tactics in which prosecutors used threats of prosecution or prison time to flip bit players in a tangle of elaborate schemes that Fitzgerald has called pay-to-play "on steroids."

But now, Fitzgerald's patient strategy has led to uncomfortable questions not only for Blagojevich but also for the powerful players who privately negotiated with him, unaware that their conversations were being monitored. Democratic Rep. Jesse L. Jackson Jr. faces queries about his interest in the Senate seat, and key players in the Obama presidential transition team -- White House Chief of Staff-designate Rahm Emanuel and adviser Valerie Jarrett -- are being asked about their contacts with the governor on the important appointment.

A defiant Blagojevich has vowed to fight the charges. But the cozy nature of Illinois politics and the state's infamous record of corruption in both political parties suggest that Operation Board Games is far from over.

"We have a lot of information gained from a number of interviews and investigation over the years," Fitzgerald told reporters Dec. 9. "This is a moment of truth for Illinois. We have times when people decry corruption, and yet here we have a situation where there appear to be wide-ranging schemes where people are seeking to make people pay contributions to get contracts or appointments or do other stuff."

The sweep of the case has been surprising even to Meyer Davis, the hospital chief executive. "When I went to the authorities five years ago, I had no idea of the extent of the corruption and how high it reached in Illinois," she told The Washington Post by e-mail. "It's appalling that leaders entrusted with regulating health care have continued to abuse that trust."

Hospital Shakedowns

Meyer Davis's hospital wasn't the only one with problems winning approvals from the state board that reviewed new projects for health-care facilities. The Chicago Medical School wanted a student housing project and found itself steered to the same construction and investment firms. Mercy Hospital faced similar obstacles. The board held up requests for open-heart surgical units and community clinics, and it seemed that a high price tag was attached to moving the board toward action.

At the center of the scheme was board member Stuart Levine, a prominent GOP fundraiser and businessman. Levine also courted Blagojevich, flying him to fundraisers in Texas and New York at which the governor collected more than $120,000 in campaign contributions. Levine held seats on the health facilities board and the teachers pension board, which controlled more than $41 billion in assets.

The conversations Meyer Davis helped record during her meeting at the Eggshell Cafe in suburban Deerfield allowed prosecutors to learn the tactics of Levine, who had cut deals with certain firms for a piece of their contracts.

Levine also had many connections. A telephone wiretap captured his discussions with Rezko, a fundraiser for Blagojevich and Obama, and several others who would become federal targets, according to lawyers who closely followed the trial testimony.

"Before they had Levine in the fold, they had his phone," said former public corruption prosecutor Patrick Collins. "They happened to get up on Levine's phone at a time when he was very active in his corrupt schemes."

Fitzgerald's office indicted Levine in 2005 on multiple fraud and extortion charges for his role in the state board schemes, securing along the way cooperation from the favored construction executive who had paid him kickbacks. But Levine's path to cooperation took 18 more months. Faced with wiretap recordings, Levine realized his legal situation was nearly hopeless, struck a plea bargain and became the star witness against Rezko.

"Levine was the guy who's given them everybody else," said Jay Stewart, executive director of the Chicago-based Better Government Association.

Rezko was an important catch. The multifaceted businessman with interests in real estate and pizza parlors became a gatekeeper to Blagojevich, advising him on appointments to boards and commissions. Obama, for example, acknowledged he had "formal discussions" with Rezko in 2003 when a close friend of Obama's, Eric Whitaker, emerged as a candidate for director of the Illinois Department of Public Health. The agency oversaw funding for the staff of the health facilities planning board, but Whitaker -- who served as the agency's director from 2003 to 2007 -- has not been implicated in the scandal. Whitaker has said he did not actively seek the job.

Rezko and Levine developed their pay-to-play scheme over a meal of strip steaks, red wine and vodka at the upscale Standard Club, just blocks from the federal courthouse in Chicago, according to court testimony.

Levine needed Rezko's help persuading Blagojevich to resist an effort to consolidate several state boards. In return, they agreed to divide kickbacks. Meanwhile, Levine pressured board consultants to give Blagojevich large campaign contributions in return for state business.

During Rezko's trial this year, his attorneys tried to discredit Levine, saying he had a $25,000-a-month drug habit and routinely gathered with five male friends at the Purple Hotel in suburban Lincolnwood to go on binges using LSD, cocaine, crystal meth and even an animal tranquilizer known as ketamine.

Jeffrey Steinback, an attorney for Levine, said, "I'm extremely fond of Stuart, and I am proud of the commitment he's made to cooperate, despite the personal cost."

The Path to Blagojevich

Throughout the Democratic presidential primaries, Rezko's trial on fraud, money-laundering and bribery charges offered a sobering picture of state business under the Blagojevich administration.

In a string of federal indictments, the governor had been cryptically referred to as "Public Official A," the recipient of large donations in return for favors. Despite the anonymity, Blagojevich had been unable to keep his name out of the spotlight. In January 2005, his father-in-law, Alderman Richard F. Mell, had accused one of the governor's top political aides, Christopher Kelly, of demanding $50,000 contributions to Blagojevich in exchange for appointments. The allegation, although withdrawn, spurred a state attorney general probe that eventually melded into Fitzgerald's investigation.

Prosecutors indicted Kelly last year on charges of tax fraud related to his gambling debts, and his attorneys signaled last week that he intends to plead guilty, possibly as early as January.

Another head rolled at the Illinois Finance Authority. Director Ali Ata, a former fundraiser for Blagojevich, signed a sworn statement in April describing how Rezko had shaken him down four times for a total of $125,000 in bribes and large campaign contributions.

At a meeting, Ata said, Blagojevich thanked him and then asked him about his desire to work in his administration.

"Mr. Blagojevich stated again I had been a supporter and a friend and asked Mr. Rezko if I'd identified job opportunities, and Mr. Rezko said, 'Yes,' " Ata testified in May during Rezko's trial.

After negotiating with Rezko, Ata testified, he bought a $127,000-a-year state job as the head of a state loan agency, the Illinois Finance Authority, which funded more than $5 billion in projects in fiscal 2008.

Wiretaps Broaden the Web

As the scandal evolved, Blagojevich played it cool, and last week he angrily told supporters he would fight for vindication. The Democrat was a congressman when he ran for governor in 2002, and he was elected with bold promises of ethics reform after his predecessor, Republican George Ryan, was indicted in a separate case. When Ryan was convicted in 2006, Blagojevich asserted that "government is supposed to exist for the good of the people, not the other way around, and certainly not for the personal enrichment of those who hold public office."

Blagojevich regularly reported to work not at the state mansion but at the Friends of Blagojevich campaign office near his home in the Ravenswood neighborhood on the city's North Side, with Rezko and a former congressional chief of staff, John Wyma, by his side.

As investigators moved in on Rezko, they inched closer to the governor. His wife, Patricia, did real estate deals with Rezko that also came under scrutiny. There were allegations that she won commissions on property sales as payback for the governor's appointments.

And then, for reasons that remain murky, Wyma in early October apparently began cooperating with Fitzgerald's team. Wyma, 42, once worked as chief of staff to some of Capitol Hill's leading Democratic voices, including Sen. Charles E. Schumer (N.Y.) and Rep. Bart Stupak (Mich.), as well as Blagojevich.

Wyma left Washington more than five years ago but remained a big donor to congressional campaigns and a lobbyist for such clients as Lehman Brothers, Philip Morris and Chicago's Children's Memorial Hospital, a key player in Blagojevich's effort to provide health care to impoverished children.

Even a children's hospital was not exempt from the pressure, according to recordings of Blagojevich's conversations with someone identified as "Individual A," thought to be Wyma.

Wyma had meetings with Blagojevich and the governor's brother in which he was exhorted to step up fundraising in advance of a new state ethics law to take effect in January, investigators said. The pressure to raise millions intensified on some of Wyma's clients, including Children's Memorial Hospital and highway contractors.

In a conversation taped by the FBI, Blagojevich threatened to hold up state funding for a Children's Hospital program unless its chief executive donated $50,000 to his campaign.

In court filings, prosecutors said "Individual A" was a subject but not a target of the criminal investigation into the health planning board. The government source is helping authorities because he hopes to win immunity from prosecution, the FBI affidavit said. Wyma has not been charged with wrongdoing.

"Mr. Wyma has made efforts to provide federal investigators with truthful information regarding the matters under investigation and will continue to do so," lawyer Zachary Fardon said.

The Blagojevich tapes opened yet another path for investigation, based on his alleged claims that he would sell Obama's Senate seat to the highest bidder. Fitzgerald has said he moved to arrest the governor and top aide, John Harris, because he feared that some of the schemes were about to be carried out.

Jackson, who is mentioned in court papers as a candidate eager for the Senate post, told reporters that he spoke with Wyma about his interest in the job this year. Unnamed "emissaries" for Jackson allegedly promised to raise $1.5 million for Blagojevich, according to the FBI affidavit.

Fitzgerald's team has scrambled to interview Jackson, as well as members of the Obama transition team who talked with Blagojevich about the appointment. A spokesman for Jackson said the lawmaker had told authorities about his tangle with Blagojevich, in which the congressman says the governor rejected Jackson's wife for a lottery post after Jackson failed to raise $25,000 for the Blagojevich campaign.

Lawyers and political analysts who have followed Operation Board Games and the work of Fitzgerald describe the government strategy as a textbook model. At his Dec. 9 news conference, for instance, the prosecutor all but invited victims and the perpetrators of shakedowns to come forward.

Kent Redfield, a political scientist at the University of Illinois, said Fitzgerald used indictments to pressure the governor's confidants to turn on one another.

"It's a message: You are in my sights, and I'd like to get you to come in and talk to me," Redfield said. "It puts pressure on the person you indicted and puts on notice the next person up the chain."

In seven years as U.S. attorney in Chicago, Fitzgerald generally has won strong reviews from government and defense lawyers alike. Obama is said to be considering keeping Fitzgerald in his job even though the coveted spots typically turn over with a new administration. But defense lawyers who have faced Fitzgerald say he can be hard-nosed when it comes to even small fish trapped in the government's net.

One former prosecutor who knew Fitzgerald 20 years ago, when the U.S. attorney was a junior defense lawyer, said he was zealous in pursuit of his goals and offended by violations of the public trust.

"His line between right and wrong is very bright, and it's very easy for him to see that line," the former prosecutor said. "If there's a brick wall, he'll take it down brick by brick."

Staff writer Joe Stephens, research editor Alice Crites and staff researcher Julie Tate contributed to this report.

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