From The Chicago Sun-Times:

Ryan attorneys offer $1 mil.

June 19, 2002

BY STEVE WARMBIR FEDERAL COURTS REPORTER

Attorneys for Gov. Ryan volunteered Tuesday to deposit $1 million from his campaign fund with the courts, as federal prosecutors demanded the money be frozen so the state can eventually be paid back for alleged fraud.

The move by Ryan's campaign fund came during an often rancorous 90-minute court hearing.

Assistant U.S. Attorney Patrick Collins argued that $1 million needed to be effectively frozen to compensate the state for the alleged corruption under Ryan before the fund is drained through legal bills.

The governor's campaign fund and his former top campaign aide, Scott Fawell, have been charged in a wide-ranging indictment alleging that state employees did political work for Ryan and his allies while being paid public money.

Another Ryan campaign aide, Richard Juliano, has pleaded guilty to his role in the scheme. Ryan himself has not been charged with any crime.

The issue of preserving $1 million in the campaign fund is a key one. If convicted, the fund--an entity and not a person--can't be sent to prison.

So the recourse prosecutors have against the fund is to seize its money.

Altheimer & Gray attorney Mark Flessner, representing the governor, initially balked at the request to set aside $1 million.

The fund has already set aside $200,000 for compensation, which is more than double the amount of fraud that defense attorneys believe prosecutors could prove, at best.

The defense attorneys also argue that there's not enough money to continue to defend the campaign fund at trial if the $1 million is out of reach.

For now, the fund has about $1.5 million but Altheimer & Gray expects bills to come due soon for $130,000.

U.S. District Judge Rebecca Pallmeyer expressed skepticism that an attorney couldn't be hired to represent it well with the remaining money in the fund.

Altheimer & Gray won't be representing the fund at trial because of possible serious conflicts, the judge has decided, a decision that was a blow to Ryan. Altheimer & Gray has represented the campaign fund for several years and has an intimate knowledge of the government's corruption case.

It's not clear that the $1 million will be permanently out of the campaign coffers.

Pallmeyer expects to let attorneys present their cases in front of her next week on whether the government has the right to seize the money permanently before trial.

The move by the governor's lawyers to voluntarily deposit the money until the court appearance next week preempted the judge from entering a temporary restraining order against the fund.