Home / Articles / Features / Feature / Illinois governors in trouble
Print this Article
Thursday, Feb. 26, 2015 12:01 am

Illinois governors in trouble

A history of corruption at the top


 

Illinois was deeply in debt and its financial outlook was bleak. After a close gubernatorial race, the people of Illinois elected a wealthy Chicago-area businessman as their governor, hoping that his talent for making money would steer the state away from a looming fiscal crisis.

Instead, Gov. Joel Matteson, who held office from 1853 to 1857, ended up embezzling more than a quarter of a million dollars from the State of Illinois by fraudulently cashing in already-redeemed state scrip. Despite the overwhelming evidence of his guilt, however, Matteson evaded indictment and was never tried nor sentenced for his misdeeds.

In the murky world of Illinois politics, not all corrupt governors were indicted or convicted, and not all the indicted or convicted governors were necessarily corrupt. Moreover, some of the indicted or convicted governors were actually fairly effective administrators, while others were straight arrows who couldn’t manage to get much done in office. In the interest of understanding a little more about the political system about which we all love to complain, what follows is a guide to Illinois governors and the crimes for which they were accused and convicted, in chronological order.

Left: Joel Matteson embezzled more than a quarter of a million dollars from the state by fraudulently redeeming state scrip, but evaded indictment by packing the jury. Right: Len Small was acquitted on charges of embezzlement and conspiracy. Within a few
PHOTO COURTESY OF THE SANGAMON VALLEY COLLECTION AT LINCOLN LIBRARY

 

Joel Matteson

Had the Illinois Constitution allowed for it at the time, Gov. Joel Aldrich Matteson might well have been elected to a second term. He was a skillful and personally charming man who had a fairly successful term in office. Among the highlights of his administration were the construction of the Governor’s Mansion (to which he advanced $10,000 out of his own pocket), the construction of a prison in Joliet and the enactment of a comprehensive common school system, financed by a two-mill tax and bolstered by local property taxes.

It wasn’t until three years after he left office that a shrewd state congressman caught wind of fraudulent state scrip in circulation and realized that the paper trail led straight to Matteson. The scrip had been issued in 1839 to help fund the construction of the Illinois and Michigan Canal. It functioned as a check drawn on the canal project, payable whenever funds became available. By the 1850s, all but $316 of the $338,554 scrip issued had been redeemed. In ideal circumstances, this redeemed scrip should have been voided and the name of the redeemer noted. The state’s financial recordkeeping had been sloppy, however, and this did not occur. Instead, much of it found its way back to the canal offices in Chicago, where it sat forgotten for the better part of a decade.

Gov. Matteson stumbled across the redeemed but uncanceled scrip (essentially a trunk full of blank checks) in Chicago soon after taking office in 1853 and apparently decided it would be safer in his custody than in the canal offices. He ordered the clerk to pack the canal records and scrip into a trunk and send it to the governor’s office in Springfield. In 1856, while he was still governor, he started redeeming the already-redeemed scrip, trading it in for state bonds that he deposited, conveniently enough, into banks that he owned.

By the time anyone caught wind of what he was up to, he had fraudulently redeemed more than $200,000 worth of scrip on the sly. An official investigation was convened in 1859, two years after he left office, and Matteson’s guilt quickly became apparent. Matteson maintained his innocence, claiming that he had purchased the scrip in good faith. Then, fearful of his reputation and eager to avoid arrest, he offered to repay the state for the scrip he hadn’t stolen and chalk it up to an honest mistake.

The state’s high-ranking Republicans were not about to let a corrupt Democrat off the hook that quickly, and a grand jury was convened in the Sangamon County Circuit Court to consider an indictment. The proceedings were highly unorthodox. Matteson himself was present, contrary to law, along with a team of attorneys later accused of tampering with the jury. After twice voting to indict, the jury reversed itself and voted 12-10 not to pursue criminal charges.

The state legislature, however, voted to hold Matteson financially responsible for the fraud, and the Sangamon County Court eventually ruled in 1863 that Matteson owed the state $253,723.77. His private residence in Springfield (across the street from the governor’s mansion) was sold at auction for $238,000 to pay the debt, and Matteson and his family fled to Europe. He died in 1873 with his reputation in tatters.

Len Small
Len Small, a Chicago Republican who was in office from 1921 to 1929, enacted several popular measures as governor of Illinois. On his watch, hanging was replaced with electrocution in capital punishment cases. World War I veterans received a state bonus. The state conservation department was established to administer fish and game codes, promote forestry and prevent water pollution. Locks and dams were built on the Illinois River near Utica. And state aid to schools was regulated to better serve weaker districts, much like what the current effort to reform the school aid formula is trying to accomplish.

Small’s biggest achievement, however, was building more than 7,000 miles of paved roads in Illinois. During his administration, Illinois added more miles of pavement than any other state in the Union. These roads were well-engineered and built economically. And because Small was a machine politician to his core, they were also used as political leverage. As Dick Simpson, professor of political science at the University of Illinois-Chicago, put it, “Len Small was part of the Republican machine. He was pretty corrupt.” In the case of the new roads, Small rewarded counties that voted for him with their share of pavement and punished those that opposed him by purposely shorting them.     

Small’s proclivity for punishing his political enemies landed him in hot water less than a year after he took office. After he slashed Attorney General Edward J. Brundage’s appropriation bill, Brundage retaliated by indicting Small for conspiracy, embezzlement and operation of a confidence game. The alleged crimes went back to Small’s second term as the Illinois State Treasurer, from 1917 to 1919. Small was accused of having deposited Illinois state funds in a dormant bank, lending those funds to Chicago businessmen at six percent interest, reimbursing the state with two to three per cent interest, and pocketing the difference. Small maintained his innocence throughout, claiming that he wasn’t aware of what was being done in his name and that the charges had been trumped up by his political enemies.

Small’s trial took place in the Lake County Circuit Court over nine weeks in the spring of 1922. After just an hour and a half of deliberation, the jury acquitted Small of all charges. Eight of those jurors wound up with state jobs, as did the presiding judge’s brothers.

In 1927, the case returned to court as a civil trial initiated by the Illinois attorney general. The Supreme Court ruled that Small owed the people of Illinois $1 million in interest from the state funds he lent, though the figure was later reduced to $650,000. Small raised the money by forcing state employees and contractors to pay into his defense fund. It is unclear if any of the money he paid back came from his own pocket.
    
Left: William Stratton was acquitted on charges of failing to report taxable income when he used campaign contributions for personal purposes. Right: Known as “Mr. Clean” while in office, Otto Kerner was tried and convicted on 17 counts, inclu
PHOTO COURTESY OF THE SANGAMON VALLEY COLLECTION AT LINCOLN LIBRARY

 

William Stratton

William Stratton, who served as governor from 1953 to 1961, was indicted for tax evasion four years after he left office, thus earning himself a place on the list of Illinois governors who have been indicted or convicted of a crime. But there are many who argue that he does not deserve to be lumped in with Illinois’ corrupt governors.

Stratton’s track record as governor is one of the more illustrious in Illinois history. Like Len Small, Stratton added more than 7,000 miles of new road to Illinois, along with 638 new bridges. Unlike Small, however, Stratton did this without wielding his roads as a weapon of political coercion. Instead, he used funds raised by recent increases in the gas tax and drivers’ license fees, coupled with a bond issue, to finance the construction of multilane interstate highways, including the expressway and tollway system around Chicago.
Stratton’s administration was also responsible for bond issues that financed the development of the state universities in Chicago and Edwardsville, as well as the expansion of the Northern, Western and Eastern Illinois universities. He opposed a state income tax and backed reform of a state sales tax that would bolster revenue in less prosperous downstate municipalities. An outspoken critic of racial segregation, he introduced a bill to create a commission to encourage fair employment practices. This bill died in the Senate.

In 1965, Stratton was charged with failing to report $95,595 of taxable income earned during his second administration, thereby evading $46,676 in taxes. The money came from campaign contributions, which Stratton used for a variety of personal purposes, including the construction of a personal lodge in Cantrall, clothing for his wife and a horse for his daughter. U.S. Sen. Everett Dirksen, the defense’s star witness, argued that, while the campaign funds were not taxable income, such personal use was perfectly legal if the donor placed no restrictions on his or her gift. The court agreed, and Stratton was acquitted of all charges. “These days it would be clearly illegal and he’d go to jail,” Simpson said. “Jesse Jackson Jr. did exactly what Stratton did – used campaign funds to fund personal expenses.”

Otto Kerner
Like his predecessor in office, William Stratton, Otto Kerner, governor from 1961 to 1968, could boast of several accomplishments during his two terms as governor of Illinois. Handsome and well-connected (his father-in-law was former Chicago mayor Anton Cermak), he was known during his governorship as Mr. Clean. It wasn’t until after he left office that he became the first Illinois governor in the 20th century to be convicted on federal charges.

Socially progressive, Kerner’s administration made large strides in health and human services. The Department of Public Aid and the Department of Children and Family Services were established on his watch. He was instrumental in making birth control available to married women. And he facilitated the construction of six new mental health clinics boasting programs that became a model for national health reform.

Kerner was also a committed proponent of civil rights. He facilitated the creation of fair employment practices and issued an executive order prohibiting discrimination in the sale and rental of real estate. In 1967, President Lyndon Johnson named him chairman of the National Advisory Commission on Civil Disorders (also known as the Kerner Commission), which was tasked with investigating the cause of recent race riots within the United States. In the report, Kerner denounced racial discrimination, warning, “Our nation is moving toward two societies, one black, one white – separate and unequal.”

Kerner’s legal troubles began in 1961, when he bought stock in Arlington Park and Washington Park racetracks from the tracks’ manager, Marjorie Everett, at a deep discount. During the Kerner administration, the tracks received favorable racing dates and other political favors. The transaction came to light in 1966, when Everett deducted the value of the gifted stock from her federal income tax returns under the assumption that bribes were part of the cost of doing business in Illinois, and in 1968, Kerner reported profits from the sale of the stock on his own income tax returns. In 1973 Kerner was tried and convicted on 17 counts, including mail fraud, conspiracy and perjury. He was fined $50,000 and sentenced to three years in federal prison. Less than two years later, he was diagnosed with terminal lung cancer and released on emergency parole. Today some political analysts view Kerner as having been led astray by his faith in Theodore Isaacs, his campaign manager and financial adviser, who was tried and convicted alongside Kerner. According to Charles Wheeler, director of the Public Affairs Reporting program at the University of Illinois Springfield, “Isaacs was a bad apple, and Kerner relied on him.”

Left: Dan Walker was convicted of bank fraud 10 years after leaving the governor’s office. Right: George Ryan was convicted on more than 20 charges, including racketeering, bribery, tax fraud, money laundering, extortion and obstruction of justice.
PHOTO COURTESY OF THE SANGAMON VALLEY COLLECTION AT LINCOLN LIBRARY & PHOTO BY MILBERT ORLANDO BROWN/TNS

 

Dan Walker

Dan Walker, who held office from 1973 to 1977, is one of four Illinois governors who were sentenced to federal prison, but unlike the others, Walker’s crimes were committed after he left office. In essence, he was a criminal who happened to have been a governor, not a criminal governor. As such, Wheeler objects to his inclusion on the list of corrupt Illinois governors. “I would look at a corrupt governor as a governor who did corrupt things in his official capacity. Dan Walker’s conviction had nothing to do with him being governor,” he noted. “We have enough public officials that get convicted of crimes that involve abuse of the public trust; we don’t have to up the body count by adding governors who happened to commit crimes after they left office.”

A combative governor, most of Walker’s term was spent locking horns with the legislature, which he openly disdained, and Chicago mayor Richard Daley, whose political machine Walker openly despised. Still, he managed to sign legislation requiring disclosure of campaign contributions and issue an executive order prohibiting corrupt practices by state employees. His administration also created the Illinois Department on Aging.

Walker was defeated in the 1976 Democratic primary by Michael Howlett, who went on to be defeated by James Thompson in the general election. A private citizen again at 55 years old, Walker engaged in a series of unsuccessful business ventures. In 1983, he became chairman and CEO of the First American Savings and Loan Association of Oak Brook. In that capacity, Walker loaned a private contractor $279,000, and then personally borrowed $45,000 from that individual, a practice which constituted bank fraud. Walker’s personal borrowing from the bank also exceeded the limit allowable by federal banking regulations; he used part of those funds to pay for repairs to his yacht. In 1987, he was charged with bank fraud, perjury and falsifying financial statements. Walker pled guilty and was sentenced to a maximum of 15 years in prison and a fine of $505,000. He was released from prison and placed on probation after 18 months in the federal penitentiary.

George Ryan
By most accounts, George Ryan, governor from 1999 to 2003, is a nice guy. Ironically for a man sentenced to federal prison, he was widely regarded as a man you could trust. And, like many of his predecessors, Ryan was a skillful administrator who could boast of many significant achievements during his administration.

Among them, Ryan improved the state’s technological infrastructure, provided billions of dollars to improve transportation, and committed record levels of funding to education. He issued a moratorium on the state’s use of the death penalty and, just before leaving office, commuted to life in prison the sentences of all 167 prisoners on Illinois’ death row. The latter action earned him a nomination for a Nobel peace prize.

On the other side of the ledger, Ryan’s public life was marred by a series of scandals. In 1994, six children were killed in a car accident involving a semi truck. The driver, Ricardo Guzman, had obtained his license by bribing someone in the Illinois Secretary of State’s office. George Ryan, at the time, was Secretary of State. Upon investigation, it came out that the bribe money went into Ryan’s campaign fund. Ryan denied involvement in the scheme, but, as Simpson noted, “He was orchestrating a Republican machine operation. He certainly had to understand that he was getting kickbacks from his employees, who were getting it from somewhere.”

The probe into the licenses-for-bribes scandal eventually reached Ryan in the governor’s mansion. In 2003, Ryan was indicted on 22 counts, including racketeering, bribery, tax fraud, money laundering, extortion and obstruction of justice. Among his crimes were using campaign funds for personal use, steering state contracts to friends and associates, accepting gifts in return for favors as governor, lying to investigators and attempting to block the state investigation into corruption in the Secretary of State’s office. Ryan was convicted in 2006 and sentenced to six and a half years in prison and served the full term. He was released on July 3, 2013.

Rod Blagojevich was impeached and removed from office, tried twice, and eventually convicted on 17 counts, including solicitation of bribes, extortion and abuse of power.
PHOTO BY NUCCIO DINUZZO/TNS
Rod Blagojevich

According to Wheeler, “Rod Blagojevich was certainly the most corrupt in recent memory.” His analogy: if Ryan went to jail for shoplifting Slim Jims from the 7-11, Blagojevich went to jail for sticking the place up and demanding all the cash in the register. Blagojevich was governor from 2003 to 2009.

In the wake of George Ryan’s scandal-plagued administration, Blagojevich ran on a platform of “ending business as usual” and bringing change to Springfield. One of his first acts as governor was to sign into law the toughest ethics reform package in Illinois history. Yet according to the U.S. attorney’s criminal complaint, filed in 2009, Blagojevich and his co-conspirators started plotting on how they could use the governorship to enrich themselves even before he took office. Taking the state’s helm when Democrats also controlled both houses of the legislature, Blagojevich was able to pass many progressive measures, including creation of a state Earned Income Tax Credit, expansion of children’s health programs, and a ban on discrimination based on sexual orientation. Yet Blagojevich struggled with state spending, exacerbating the looming pension crisis and at one point proposing to go so far as to sell or mortgage the Thompson Center in Chicago to raise funds.

In 2009, Blagojevich was arrested. Among his alleged crimes were soliciting bribes to fill Barack Obama’s recently vacated Senate seat; shaking down Children’s Memorial Hospital for a campaign contribution in exchange for the release of $8 million of state funds; and seeking campaign contributions from individuals or companies who received political favors or state contracts from the Blagojevich administration. Blagojevich was impeached and removed from office in 2009. Of the 24 charges for which he was indicted by a federal grand jury, he was convicted on one, and a mistrial was ordered for the other three. The case was retried, and Blagojevich was found guilty on 17 of 20 counts. In 2012 he began serving a 14-year prison sentence at the Federal Correctional Institution in Littleton, Colorado.

Why Illinois and what to do?
Why does Illinois have such a lousy track record with its public officials? Why is it third on the list of most federal public corruption convictions per capita in the United States? Simpson and Wheeler agree that the answer lies on the way Illinois has approached government from the earliest days of its statehood, when it inflated the number of residents within its borders to achieve statehood.

Illinois, Wheeler explains, has an individualistic view of government, whereby the political system is seen as a marketplace where one can improve oneself financially and socially. “The basic idea is helping yourself and your friends, not about instituting a perfect form of governance,” Wheeler said. That “what’s-in-it-for-me” attitude gave rise early on to machine politics, in which political machines are used to steal elections and patronage is used to pay off the political footsoldiers.

There is hope for Illinois, but, as Simpson cautions, “there is no silver bullet. It will take a long time, but everyone can do their part to help eliminate the pattern of corruption.” In his book, Corrupt Illinois: Patronage, Cronyism, and Criminality, Simpson outlines a multipoint plan of action to steer Illinois away from its pattern of political corruption that includes campaign finance reform, expansion of civic education, election of reform-minded individuals and holding public officials to a higher standard of transparency and accountability.

“It will take time. It’s taken us 150 years to establish this pattern of corruption, so it will take several decades to change,” Simpson said.

But it can be done.

Erika Holst is curator of collections at the Springfield Art Association and author of Wicked Springfield: Crime, Corruption, and Scandal During the Lincoln Era.

Calendar

  • Fri
    19
  • Sat
    20
  • Sun
    21
  • Mon
    22
  • Tue
    23
  • Wed
    24
  • Thu
    25
   

PUB CRAWL