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Wednesday, Dec. 19, 2007 03:03 pm

The governor’s buddy

Kelly indictment clouds discussion of gaming expansion

Untitled Document It could have been worse, I guess. Gov. Rod Blagojevich wasn’t named or even alluded to in last week’s federal tax-fraud indictment of Chris Kelly, one of his best friends, closest advisers, and biggest fundraisers. Blagojevich does appear to have been fingered in a different indictment, but that got lost in the shuffle. Regardless, last week wasn’t good. Blagojevich is now in the awkward position of pushing for a massive gambling expansion while the political world discovers that the last time the governor did so, in 2003, he put his buddy Kelly in charge of the project. According to the feds, Kelly placed millions of dollars in bets with Illinois bookies on sports contests during that period. He allegedly hid some of those winnings and losses from the Internal Revenue Service, and in one case Kelly allegedly disguised a payment to a bookie as a loan from his company, BCI Commercial Roofing. With all that in mind, the gaming-reform ideas espoused by House Speaker Michael Madigan look pretty prescient. Madigan’s proposal would remove the governor as much as possible from directly choosing members of the gaming board and prevent Blagojevich from having almost any contact with those members once they’re seated. The speaker said weeks ago that he wouldn’t approve any gaming expansion, including a Chicago-owned casino and slots at horseracing facilities, unless his reforms were part of the deal. Madigan saw how Kelly operated in 2003, when the governor flip-flopped on his promise not to expand gaming but then dispatched Kelly to cut a deal. Kelly rode herd on the Illinois Gaming Board, for instance, to get them to do the governor’s bidding, including where new casinos would be sited. Madigan has also seen how the governor has conducted business over the years and didn’t want to take any chances. There are nine-or-so federal and state investigations of this governor that we know of. There may be more, but I lost count a long time go. But even with Madigan’s demanded safeguards — and they appear pretty much ironclad — it’s now going to appear awful seamy to push a new Blagojevich-backed gaming-expansion bill through the General Assembly in the wake of Kelly’s indictment. The indictment probably won’t completely stop the bill’s progress — the hunger for a multibillion-dollar state construction plan funded by gaming dollars is just too great — but it will certainly give legislators pause, and that’s probably a good thing. We’re not talking about building an amusement park here. As Kelly’s predicament seems to show, even smart guys can have serious weaknesses and get themselves into serious trouble. Despite his lawyer’s repeated claims that Kelly owes no taxes, he is now facing 38 years in a federal prison. Some people, facing that much time behind bars, might consider making something up about a fellow federal target. But the most direct threat to the governor wasn’t necessarily Kelly’s indictment — it was the reindictment of Nick Hurtgen, a former investment banker. A federal judge had tossed the first round of indictments against Hurtgen, claiming that the government hadn’t proved that Hurtgen knew he was involved in an illegal scam to pry kickbacks from hospital officials to allegedly pad Blagojevich’s campaign fund.
This time around, the feds claimed that Hurtgen told a hospital exec that “Public Official A” wanted construction magnate Jacob Kiferbaum to get the contract for Edward Hospital’s planned expansion. You don’t want to know why the unnamed Official A was backing Kiferbaum’s bid, Hurtgen essentially told the exec, adding, though, that it was “all about the money” for Public Official A’s campaign fund. Public Official A has previously been reported to be Blagojevich. The feds also added more charges yesterday against former Blagojevich pal, adviser, and fundraiser Tony Rezko, whose federal corruption trial begins in February. That trial will be crucial to the U.S. attorney’s apparent efforts to move up the ladder. If the feds convict Rezko on counts related to Blagojevich and Kelly, that will buttress any case they might have against both of those men. So, yeah, it could have been worse for the governor last week, but this ain’t over yet.
Rich Miller publishes Capitol Fax, a daily political newsletter, and thecapitolfaxblog.com.
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