From The Chicago Sun-Times:

Judge to freeze Ryan fund

June 14, 2002

BY STEVE WARMBIR FEDERAL COURTS REPORTER

Gov. Ryan likely won't have access to up to $1 million in his indicted campaign fund anytime soon, a federal judge made clear Thursday, after prosecutors made an emergency motion to freeze the money.

Prosecutors want to ensure the fund isn't bled dry by legal bills so there's enough money to pay back the state if the feds prove their corruption case against the fund.

U.S. District Judge Rebecca Pallmeyer said Thursday she intends Monday to order the fund to post a bond.

It's the second blow Ryan has suffered this week in federal court.

Last Monday Pallmeyer bounced the high-powered law firm Altheimer & Gray, which represents Ryan's campaign fund, off the case. She cited potential conflicts. The firm still represents Ryan as an individual.

Ryan himself hasn't been accused of any wrongdoing. But his campaign fund and former campaign manager, Scott Fawell, were indicted in April on charges that state employees were used to do Ryan campaign work on the taxpayer's dime.

Prosecutors want the fund to pay back the government salaries those state workers were collecting when doing political work, among other fraud.

Fawell is accused of squelching politically sensitive investigations, having documents shredded and taking favors from a political ally, including prostitutes in Costa Rica. Another former top campaign aide, Richard Juliano, has pleaded guilty to his role in the scheme.

On Thursday, Ryan had no comment on the judge's intention to effectively freeze $1million in his campaign fund.

The judge gave the fund until Monday to respond to her intentions.

"Until the court gives its final decision, we will not speculate as to what may or may not happen after that," Ryan spokesman Dennis Culloton said Thursday.

Prosecutor Patrick Collins noted in a court filing that there was $1.275 million in the fund as of April 1.

But since then, out of one campaign account, Citizens for Ryan paid the law firm more than $330,000. Prosecutors cried foul, saying fund attorneys had vowed no large expenditures would be made.

Altheimer & Gray attorney Mark Flessner disagreed, saying any guarantees didn't include legal bills.

"I frankly was dismayed, shocked by this," Flessner said of the government's request.

Ryan's campaign fund has set aside $200,000 to be seized if it loses the case, but prosecutors balked at the low amount.

"$200,000 is just not good enough," Collins said. "$500,000 is not good enough."

The fund could have less than $1 million already, after recent payouts, Collins said.

"The amount is getting dangerously close--if it hasn't already--to falling below $1 million," Collins said.

Culloton declined to say how much money was in the fund.