By Matt O'Connor
Tribune staff reporter
Published April 16, 2002

Gov. George Ryan's political campaign committee, charged this month in an unprecedented racketeering indictment, continues to pay attorney fees for numerous witnesses in the ongoing federal probe, including government witnesses expected to provide incriminating testimony at trial, prosecutors said Monday.

The disclosure came as prosecutors, citing "insurmountable" conflicts of interest, filed a 20-page motion seeking to disqualify Altheimer & Gray, a powerful Chicago law firm, from continuing to represent the Citizens for Ryan campaign committee.

Even in cases where it referred clients to other lawyers, Altheimer & Gray continued to arrange for Citizens for Ryan to pay the attorney fees for many of these former clients, the government said.

"That arrangement continues to this day, with Citizens for Ryan continuing to pay the attorney fees for numerous witnesses in the federal investigation, including former clients that the United States intends to call as trial witnesses who have incriminated Citizens for Ryan in prior sworn testimony," the government said in the filing.

Noting the problems caused by the conflict, the government cited one instance in which the law firm said a woman it represented had no incriminating information to provide about the campaign committee. After the firm was removed from representing the woman, however, she provided damaging evidence against the committee.

From January 1999 through February 2002, Citizens for Ryan paid Altheimer & Gray almost $1.1 million for unspecified legal services, according to the government, citing campaign reports and subpoenaed records.

Citizens for Ryan has also paid substantial fees to law firms on behalf of clients once represented by Altheimer & Gray and referred by the firm to other lawyers, prosecutors said. According to state records, Ryan's campaign committee paid other law firms nearly $66,000 in legal fees in the last half of 2001 alone.

Ryan confidant Jeremy Margolis is a partner in Altheimer & Gray.

On Monday night, Margolis declined to comment on the government filing. The law firm has two weeks to file a written response.

In court last week, the firm downplayed any conflicts over its representation of numerous witnesses in the investigation.

According to the government, the law firm has represented at least 40 individuals and entities during the four-year Operation Safe Road probe, including co-defendant Scott Fawell, Ryan's campaign manager in the 1998 governor's race who was also indicted.

Prosecutors say some of the witnesses will be called by the government to testify at the trial, raising ethical questions for Altheimer & Gray lawyers who would have to cross-examine former clients.

They allege there is also a conflict resulting from Altheimer & Gray's representation of the secretary of state's office, identified by prosecutors as the principal victim in the racketeering scheme.

Prosecutors said they learned last week from Secretary of State Jesse White's chief lawyer that his office doesn't plan to give up the right to challenge any conflict-of-interest questions resulting from Altheimer & Gray's prior representation.

The government said it has raised the conflict problems over the last 1 1/2 years and that U.S. District Chief Judge Marvin Aspen sided with the government and disqualified Altheimer & Gray from representing three witnesses before the grand jury.

Altheimer & Gray denied that the unidentified woman, identified by prosecutors as "Witness B," had any incriminating information to provide against Citizens for Ryan or any other of the law firm's clients, the government alleged.

Yet after Aspen bumped Altheimer & Gray from representing the woman, she testified last October before the grand jury and provided incriminating evidence about Citizens for Ryan, according to the prosecution filing.

Prosecutors also pointed out that Altheimer & Gray represented Fawell at what they called "a critical juncture in the investigation"--in 1998, when he is alleged to have lied to the federal grand jury.

In fact, Altheimer & Gray has been involved from the earliest stages of the probe. In response to allegations of corruption during the 1998 governor's campaign, Ryan, then secretary of state, retained Altheimer & Gray to conduct its own probe on behalf of the office, according to the government filing. On completing its inquiry, Altheimer & Gray concluded that internal investigations of wrongdoing at the secretary of state's office had been conducted thoroughly and that no further investigation was necessary, the government noted.

So far, 42 individuals have been convicted of wrongdoing.

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