From the St Louis Post-Dispatch

Indictment accuses Ryan of corruption and cover-up
By Kevin McDermott
Post-Dispatch Springfield Bureau
12/17/2003 CHICAGO - Former Illinois Gov. George H. Ryan spent more than a decade
bilking Illinois' taxpayers to benefit himself and his friends and family,
overseeing a brazen "pattern of corruption" that included sweetheart deals
for state leases, kickbacks on state contracts, extortion, theft and tax
evasion, the federal government alleged in an indictment Wednesday.
The indictment alleges that Ryan personally engaged in racketeering, mail
fraud, tax fraud and lying to investigators. He is also accused of allowing
friends to use the power of his office to demand kickbacks from state
contractors and secure lavish vacations and cash for Ryan and his family.
"What we're alleging in the indictment is, basically, the state of Illinois
was for sale," U.S. Attorney Patrick Fitzgerald said.
The allegations, if proved, could draw a prison sentence of decades for the
69-year-old Republican former governor. It would also complete one of the
most dramatic falls in Illinois political history - of a man who spent 30
years climbing to the pinnacle of public life, has been lauded worldwide for
his work on death penalty reform and just a few months ago was under serious
consideration for the Nobel Peace Prize.
The indictment caps a five-year federal investigation that has already
netted 65 other indictments of Ryan's staff and associates and others in
connection with Ryan's tenure as Illinois secretary of state in the 1990s.
In a written statement issued Wednesday afternoon on Ryan's behalf, attorney
Dan K. Webb of Winston & Strawn said that he was confident that his client
would be exonerated and called the allegations "false, unfair and
malicious."
Webb, a former U.S. attorney, referred to Ryan's 40 years in politics and
his recent renown for emptying the state's death row after courts ruled that
13 people sentenced to death in Illinois had been wrongfully convicted.
The attorney also pointed to Ryan's modest lifestyle. "He makes ends meet
each month based on Social Security payments and a job pension," Webb said.
"The jury will easily conclude this is not the financial picture of a man
who has engaged in the type of activities alleged in this indictment."
The long-expected indictment was handed up by a federal grand jury in
Chicago early Wednesday. It alleges that Ryan spent most of his eight years
as secretary of state overseeing a pattern of state-funded corruption
involving close friends, then lied to investigators in several interviews
with the FBI while he was governor.
Ryan is accused of accepting for himself or his family illegal gifts of cash
and vacations totaling more than $167,000 and then lying to the Internal
Revenue Service to conceal it. He also is accused of allowing associates to
illegally make more than $3 million through their special access to state
government.
The indictment also names Lawrence E. Warner, 65, a Chicago businessman and
Ryan friend. Warner was originally indicted last year on charges of using
his influence at Ryan's secretary of state's office to benefit himself and
others.
The indictment alleges that Warner used his connection with Ryan to buy
property that he knew was going to be leased by the state and then sold the
property at a large profit once the state lease contracts became public.
The indictment also alleges that Warner went to several state contractors
and demanded payment from them with the threat that he would use his
influence with Ryan to get their contracts revoked if they didn't pay him.
In one case, the indictment alleges, a company called American Decal
Manufacturing, which prints decals that go on license plates, was asked to
pay Warner $300,000 to prevent the loss of a contract worth $1.2 million a
year.
"Warner went to (the company) and said, unless he was paid money . . . he
would see that the contract went elsewhere," Fitzgerald said.
Later, the indictment alleges, Ryan personally stepped in to prevent a
specification change that might have caused the company to lose its contract
anyway - thus preserving Warner's payments from the company.
Fitzgerald said the "good news" from the investigation was that at least one
company that does state business - Modern Business Systems - was told by
Warner to pay money in order to get a contract but refused.
Fitzgerald declined to discuss whether the companies that alleged to have
paid Warner to keep their contracts might face some kind of charges.
Taking care of Ryan
The indictment alleges that Warner worked with Donald Udstuen, a lobbyist
and Republican Party insider, to enrich themselves through their connection
to Ryan and his power as secretary of state. Among the allegations is that
Warner and Udstuen had a standing deal that they would divide the money they
made through the state - two-thirds for Warner, one-third for Udstuen.
"Warner, with his two-thirds, would take care of Ryan," Fitzgerald said.
The $3 million-plus that Warner made from inside deals on state contracts
came "with George Ryan's knowledge and approval," Fitzgerald stated.
Ryan's former chief of staff and campaign director, Scott Fawell, is serving
a prison term for his role in using state resources for Ryan's political
campaigns. Others have pleaded guilty and cut deals with the government in
exchange for their cooperation - including Udstuen, a former lobbyist who
was involved in many of the allegations outlined against Ryan in the
indictments.
Fitzgerald declined to give details of the government's case against Ryan,
but he acknowledged Wednesday that Udstuen's information was key. "It's
public record that Mr. Udstuen pleaded guilty to conspiracy," Fitzgerald
said.
The indictments, he added, contain "information that obviously emanated from
Mr. Udstuen."
Among other allegations against Ryan, as spelled out in the indictment, are
that:
When internal secretary of state investigators began probing allegations of
a bribe-for-license schemes among Ryan's staff, Ryan was personally involved
in a decision to fire the investigators.
Ryan lied to federal investigators when he was asked whether he knew that
campaign fund-raising records had been seized during a federal raid of a
drivers license facility while Ryan was secretary of state. Ryan said he
didn't know that, but the indictment alleges he had been told about it by
his inspector general, Dean Bauer - an old friend whom Ryan appointed to run
internal investigations in the office after firing the previous
investigators. Bauer has been convicted in the investigation.
Ryan and others fleeced the Phil Gramm presidential campaign of $32,000 in
1996, getting money from the campaign to pay for "consulting services" while
actually dividing it among themselves. "Ryan directed his share of the
'consulting' payments to certain family members, who did not perform bona
fide services for the Gramm campaign," the indictment states.
Ryan set aside campaign donations for his personal use and did not report
the money as income, as required under state and federal law.
Of the 22 counts in the indictment, four counts - involving extortion, money
laundering and structuring money - apply only to Warner, though those
activities involved Ryan in connection with other charges against him,
according to the indictment.
The remaining 18 charges are lodged against either Ryan and Warner, or Ryan
alone. They include racketeering conspiracy, nine counts of mail fraud,
three counts of making false statements and four counts - all against Ryan -
of filing false tax returns.
The long climb and fall
Ryan - long viewed as the epitome of the cigar-chomping, deal-cutting
politician who brokers compromise and gets roads built - spent 30 years
climbing from the provincial politics of Kankakee, Ill., to the Statehouse.
It wasn't until Ryan reached the pinnacle, with his election as governor in
1998, that it began coming apart.
It began with allegations during Ryan's campaign for governor that his
associates at the secretary of state's office had accepted bribes to license
unqualified truck drivers. The federal investigation - called Operation Safe
Roads - has established that some of that bribe money was ultimately
contributed by Ryan's employees to his campaign fund.
One of the illegally licensed truckers was later involved in an accident
that killed six children on a Wisconsin highway in 1994. The accident became
a hot issue in the 1998 campaign, and since then has grown among Ryan's
critics to become a symbol of what can happen when public service is
compromised by political greed.
During Ryan's term as governor, federal prosecutors followed a trail that
led up through Ryan's closest advisers and friends. Ryan tried to define his
legacy by rebuilding Illinois' infrastructure, opening ties to Cuba and
spawning a national debate over the death penalty by suspending executions
in light of faulty death sentences. But by the time his term was closing
last year, the growing scandal had his administration so cowed that he
declined to run for a second term.
The indictment comes at the end of a banner year for Illinois' political
reform movement. Newly enacted legislation has put tough new restrictions on
the influence of lobbyists and political friends on government officials.
Some reformers said Wednesday that Ryan's indictment could spur more
legislation next year, including the possibility of campaign fund-raising
limits, which Illinois does not have.
"At its heart, this is a campaign finance issue," said Cynthia Canary of the
Illinois Campaign for Political Reform. "It makes that case loud and clear.
In this 'anything goes' system of ours, anything went."
The next step will be Ryan's arraignment, at which he will enter a plea. No
arraignment date had been set as of Wednesday.
George Ryan
Feb. 24, 1934: Born in Maquoketa, Ill.
1952: Graduated from Kankakee High School.
1954-56: Served in the Army, including a 13-month tour of duty in Korea.
1956: Married his high school sweetheart, Lura Lynn Lowe.
1961: Received a bachelor's degree in pharmacy, Ferris State College in Big
Rapids, Mich. After graduation, he worked as a pharmacist in his
family-owned pharmacy until 1990.
1962: Worked for Republican state Sen. Ed McBroom.
1965: Managed his brother Tom Ryan's campaign for mayor of Kankakee. (Tom
Ryan won.)
1968: Appointed to the Kankakee County Board of Supervisors. Served through
1973.
1972: Elected to the Illinois House, where he served through 1983.
1977-81: Minority leader of the Illinois House.
1981-83: Speaker of the Illinois House.
1982: Elected lieutenant governor.
1986: Re-elected lieutenant governor.
1990: Elected secretary of state.
1994: Re-elected secretary of state.
1998: Elected 39th governor of Illinois.
2001: Announces he will not seek a second term as governor.
January 2003: Commutes the death sentences for all 167 Illinois prisoners on
death row. Action comes with less than 48 hours remaining in Ryan's term as
governor.
October 2003: Nominated for Nobel Peace Prize. The prize goes to Iranian
activist Shirin Ebadi.
December 2003: Indicted for conspiracy and fraud while serving as governor
and secretary of state.
- Compiled by Pamela Barnes of Post-Dispatch News ResearchTrisha Howard of the Post-Dispatch contributed to this report.