Ryan told to oust probers, U.S. says

From The Chicago Tribune:

Ryan told to oust probers, U.S. says
Prosecutors cite aide's 1994 memo

By Andrew Zajac and Ray Gibson, Tribune staff reporters. Tribune staff reporters Diane Rado, Laurie Cohen, Todd Lighty, Ray Long and Rick Pearson contributed to this report
Published June 28, 2002

Gov. George Ryan's chief of staff prodded him "to clean house" and weed out internal investigators asking questions about his campaign's shady fundraising practices when he was secretary of state, federal prosecutors alleged Thursday.

In a court filing that provided fresh detail on the scope and the cost to taxpayers of alleged corruption during Ryan's tenure as secretary of state, prosecutors cited a December 1994 memo to Ryan from his chief of staff, Scott Fawell, that called for firing aggressive agents in the secretary of state's inspector general's office.

Fawell urged Ryan, who was considering a run for higher office, to get "someone in there who won't screw our friends, won't ask about [fundraising] tickets," the filing said.

"Someone tough has to go in there and get the investigators to no longer freelance as they see fit. Need to clean house in my opinion," Fawell wrote, according to prosecutors.

Weeks later, in a follow-up note to Ryan, Fawell wrote that a decision had been reached to fire a top agent and transfer two others who had been investigating the selling of fundraising tickets at driver's license facilities in Naperville, Libertyville and McCook, prosecutors said. Shortly afterward, the office was disbanded.

Ryan has adamantly insisted he did not learn of corruption brewing in his office until 1998, when federal prosecutors launched Operation Safe Road, the ongoing inquiry centered on his eight years as secretary of state.

"The governor doesn't recollect receiving the memo" or having any conversation about it, Ryan spokesman Dennis Culloton said Thursday.

Culloton noted government investigators have reported finding a computer disc during their inquiry, and he suggested the memo may have been retrieved from it. "We don't know this memo was sent," he said.

Federal authorities have filed their evidence under seal from public disclosure and would not comment on whether the memo was electronically stored.

Ryan has not been charged with wrongdoing. But recent indictments stemming from the federal investigation have reached into the governor's inner circle. The Citizens for Ryan campaign fund, Fawell, Ryan confidant Larry Warner, political consultant Roger Stanley and others are charged with a variety of corruption-related offenses. The charges range from using state workers to campaign on state time to accepting kickbacks in exchange for state contracts and selling low-digit license plates for campaign cash.

Ryan's handpicked inspector general, Dean Bauer, whose job was to root out corruption in the secretary of state's office, has been convicted of obstruction of justice for covering up evidence of wrongdoing.

ID tags allegedly removed

The latest filing by the federal government contends Fawell used state workers and state equipment to secure Ryan's 1994 re-election as secretary of state and his 1998 election as governor, and to assist Republican candidates for the Illinois House in the 1996 elections.

To show the alleged extent of the state property that was diverted to the campaign and the effort to cover it up, prosecutors said an eyewitness told them Fawell used a screwdriver to remove secretary of state identification tags from equipment being taken to the offices of Citizens for Ryan.

The memos were contained in a broader filing aimed at supporting the government's contention that $1 million in the Citizens for Ryan fund should remain frozen so that it can make restitution if the prosecution wins its case.

Prosecutors allege Fawell and other Citizens for Ryan operatives masterminded a series of schemes to hide political work on state time that cost taxpayers more than $1 million. The government said its tally was "conservative."

Attorneys for Fawell and Citizens for Ryan declined to comment.

The court filing marked the first time authorities have tried to put a price on the alleged wrongdoing, although they said the figure is likely to increase as the investigation continues.

Federal prosecutors tallied a cost to taxpayers of at least $311,000 in salaries for secretary of state employees allegedly working on campaigns on state time between 1994 and 1998.

According to federal authorities, 17 secretary of state employees were deployed to work on House Republican campaigns on state time. The employees were paid their regular state salaries and also shared an additional $100,000 in cash from Citizens for Ryan that was allegedly laundered through a company controlled by Stanley, a GOP insider, authorities said.

An additional $455,000 went for job promotions and pay raises to state employees as a reward for campaign work, most of that after Ryan was elected governor, authorities said. Diligent campaign workers received outsized raises, such as one staffer who coordinated a phone bank and got a 10 percent pay boost, nearly three times the expected increase for his state job classification, prosecutors said.

In addition, secretary of state supervisors used their public office to improperly solicit more than $250,000 in campaign contributions for Citizens for Ryan through a variety of methods, investigators said, including trading low-digit license plates for cash and a massive high-pressure program to sell fundraising tickets.

The campaign operation also helped itself to free use of state cell phones, computer equipment and technicians, parking spaces, paper, vehicles, toll passes, a TV-VCR, a refrigerator, an industrial shredder and other taxpayer resources worth more than $13,000, the filing said.

The court papers allege a driven, detail-obsessed campaign apparatus that created false time sheets and arranged for desktop computers to be turned on and off so it appeared employees on political errands had been at work.

To further the image that campaigning state workers were on the job, prosecutors said employees were instructed by Fawell to leave "their [SOS office] spaces `lived in.'" Their co-workers were instructed that "when any calls come in they should take a message--say the person is out at a meeting," authorities said.

Funds saved for ads, U.S. says

Fawell is portrayed by prosecutors as ruthless in his use of people and goods as campaign commodities and fixated on diverting state resources so that Ryan campaign money could be saved for expensive television ads closer to election time.

Fawell explicitly discouraged tracking of appropriated state goods and "repeatedly justified the diversions based on the need to save as much money as possible for paid media down the [1998] campaign stretch," the filing alleged.

When a secretary of state employee challenged Fawell that he might be subject to ghost-payrolling prosecution, Fawell responded that state employees diverted to Citizens for Ryan "had taken the risk and that, in any event, the campaign could not afford" to pay them full time, according to the filing.

Also on Thursday, the Chicago law firm Altheimer & Gray said it will appeal a judge's ruling earlier this month that disqualified it from representing Citizens for Ryan because of possible conflicts of interest. The firm has defended the campaign fund since it was indicted.

Chicago defense attorney Thomas Breen is representing Citizens for Ryan while the appeal is pending.

U.S. District Judge Rebecca Pallmeyer had ruled Altheimer & Gray could not defend Citizens for Ryan against federal racketeering charges because the firm also had once represented Fawell.