From the Chicago Tribune

Ryan pal didn't owe state 'honest services,' judge says
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By Mike Robinson
Associated Press Writer
November 6, 2003

In a blow to prosecutors, a judge today dismissed government charges that a friend of former Gov. George Ryan accused of fixing state contracts deprived the taxpayers of his "honest services."
U.S. District Judge Rebecca R. Pallmeyer said lobbyist Larry Warner could not be so charged because he was a private citizen and not a state official and therefore didn't owe the taxpayers any honest services.
"The court reluctantly concludes that Warner cannot be charged with defrauding the public of his own honest services because he was a private citizen who did not owe such a fiduciary duty to the citizens," she ruled.
Pallmeyer's decision didn't knock any counts out of the 10-count racketeering indictment against Warner but did erase parts of six counts -- portions that prosecutors had described as important to their case.
Warner, 61, is accused of steering lucrative state contracts and leases to favored contractors when Ryan was secretary of state and pocketing $2.8 million in return -- money he describes as lobbying fees. Warner had pleaded innocent to the charges.
A spokesman for the U.S. attorney's office, Randall Samborn, declined to comment on how tough Pallmeyer's decision would make it for prosecutors to win the case.
"All I can tell you is we are reviewing the decision and considering our options," Samborn said. One option would be to appeal.
Chief defense counsel Edward M. Genson declined to describe the decision as a major victory.
"The judge followed the law and we are very pleased," Genson said.
The trial is due to get under way Feb. 23 before Pallmeyer.
Warner is prominent among 65 individuals charged and 58 convicted to date in the federal government's five-year Operation Safe Road investigation of corruption in the secretary of state's office under Ryan.
Prosecutors say Warner had so much power when Ryan was secretary of state -- before his 1998 election as governor -- that he owed the office the same honest services that an actual public official would.
Prosecutors say his power stemmed from his close friendship with an individual prosecutors describe only as "SOS Official A," who also allegedly got payoffs designed to influence the performance of his duties.
Ryan has said he doesn't think he is Official A. He has not been charged with any criminal wrongdoing so far in the ongoing investigation.
Pallmeyer's 26-page opinion kept every count in the indictment alive. But it tore out one of the two theories on which five mail-fraud counts were based -- that Warner cheated the state out of his honest services.
Prosecutors remained free, however, to tell jurors that Warner was guilty of mail fraud under the theory he deprived taxpayers of "money and property."
Eight racketeering acts specified in the indictment's 49-page Count I were also based on the "honest services" theory. But attorneys said the government was still free to tell jurors that Warner conspired to deprive the taxpayers of Official A's honest services and those of other employees of the secretary of state's office.
Extortion and money laundering counts were not affected by the ruling.
Pallmeyer said prosecutors have offered evidence that Warner had so much power in the secretary of state's office that he was effectively its "agent."
But she said that wasn't enough to charge him as a private citizen with defrauding the public.
"The court is unwilling to adopt a construction of the mail fraud statute so expansive as to require a jury to decide whether a private individual acted enough like a government official to make him criminally liable," she said.
Copyright (c) 2003, Chicago Tribune