From the Daily Southtown

Prosecutors detail case against Ryan Court filing alleges pattern of systematic corruption
Wednesday, January 5, 2005
By Chris Hack Staff writer
Former Gov. George Ryan not only allowed his friends to get rich off state contracts and leases, but sometimes personally intervened to make sure the corruption continued, federal prosecutors alleged in court papers made public Tuesday. Ryan was indicted a year ago on federal racketeering charges alleging he profited from contract kickbacks and bribes collected by friends during his two terms as secretary of state, and then lied about it while governor. He's scheduled to stand trial in March alongside co-defendant Larry Warner, a longtime friend and lobbyist. The 114-page court filing is a preview of the government's case against Ryan and Warner. Although it doesn't bring up any significant new allegations of wrongdoing, the document is sprinkled with new details and vignettes portraying a pattern of unapologetic graft. Immediately after taking over the helm of the secretary of state's office in 1991, Ryan allegedly allowed Warner and a few other close friends insider access to the agency's workings to profit off contracts. And an alleged incident from a year later shows Ryan also was willing to turn a blind eye toward other corruption under his watch. The document describes a conversation between Ryan and then-Cook County State's Attorney Jack O'Malley just before a 1992 press conference announcing charges against a corrupt manager of a Midlothian secretary of state facility. O'Malley told Ryan he hoped to rout out more corruption within the secretary of state's office. "(Expletive) you, Jack," Ryan allegedly told the state's attorney. "These are my guys." A footnote in the government filing says O'Malley doesn't recall the conversation. But an assistant state's attorney who was present does remember, and later told investigators he was "stunned by the import of the statement — that Ryan's political people were not to be touched." Ryan is accused of profiting from the secretary of state corruption by collecting financial benefits from Warner and other lobbyists: He allegedly took gifts ranging from money for his daughter's wedding to large loans for family businesses. And once a year for nearly a decade, Ryan and his wife spent at least one week at the Jamaican vacation home of Homewood resident Harry Klein, a currency exchange magnate and Governors State University trustee. Ryan was introduced to Klein by a mutual friend, former Rich Township GOP boss Manny Hoffman, according to the filing. Ryan, whose office regulated currency exchanges, was worried about an appearance of impropriety and always gave Klein a check to pay for the island stays. But prosecutors claim Klein, who has not been charged with a crime, always gave Ryan all his money back in cash. According to the court papers, Klein still was rewarded for his hospitality: Ryan ensured the secretary of state's office rented a building Klein owned in South Holland. A secretary of state employee had already determined Klein was asking too much for rent, the structure needed $54,000 in renovations, its frontage road location was undesirable, and the parking lot was much too small to serve a secretary of state facility. But the deal, worth about $600,000 over five years to Klein, went through anyway. Ryan not only took the unusual step of personally signing the lease himself but later fumed at an underling who took it upon himself to inform Klein he had officially won the lease. "Ryan wanted to be the one to tell Klein about the awarding of the lease," according to the court filing. Ryan also is accused of allowing Warner to profit off several other secretary of state leases of properties in which he had secret ownership interests. The government filing comes three months after former Ryan chief of staff Scott Fawell — already in federal prison for a conviction on corruption charges — agreed to cooperate with prosecutors and testify against his old boss, and paints a more refined picture of the close relationship between Warner and Ryan. "Fawell expressed his concern to Warner that Warner's involvement in too much official business would be picked up by the media and come back to hurt Ryan politically," according to the filing. One government witness told prosecutors he bumped into Warner as the lobbyist smoked a cigar outside a Ryan fundraiser at Cog Hill Golf and Country Club in Lemont in the early 1990s. Warner offered up a good cigar he kept for "important" people, and said he only doled out cheap cigars to the career secretary of state employees. "Warner then made the comment that he could get 'any of these people fired tomorrow,' but he found it was easier just to give them small gifts and 'stroke them' into doing what he wanted," the filing said. In just one alleged kickback scheme with state vendors, Warner for years collected monthly payments from a Chicago company that had long held a lucrative secretary of state's office contract to manufacture license plate renewal stickers. Warner allegedly used his influence with Ryan to ensure bid requirements that favored the company stayed in place. Eventually, a secretary of state employee who oversaw the sticker program worried that Warner's involvement was improper and perhaps illegal, and stopped returning his phone calls. It wasn't long before Ryan intervened, according to the government document. "Warner is your friend," Ryan allegedly told the official over the phone before adding that his lobbyist buddy was simply a "businessman trying to do business." And when a committee of secretary of state employees suggested changing the sticker contract requirements to allow for more competitive bidding and possibly save the state money, "Ryan indicated he was unhappy with the change," according to the filing. The bid specifications were changed back to the Chicago company's favor, and the firm once again won the contract. The company was sold several times during Ryan's tenure as secretary of state. Each time a new management team took over the firm, Warner allegedly materialized to demand his monthly kickback — which started as $2,000 but increased to $8,000 over the years — in exchange for ensuring the company kept its secretary of state work, according to the filing. Warner also is accused of making money off a multi-million-dollar secretary of state computer contract with IBM, as well as smaller contracts for vehicle title lamination, digital driver's license production and office air conditioning service. Prosecutors in the Ryan case have a list of more than 1,200 potential witnesses, although they plan to call only a fraction of those people to testify, Assistant U.S. Attorney Patrick Fitzgerald said Tuesday. The trial is expected to last at least six months; Fawell, the government's first witness, will likely be on the stand for several weeks, Collins said. The preview filing was made public Tuesday over objections from defense attorneys for both Ryan and Warner. They claimed publicity from the government disclosure would bias potential jurors in the case, and requested the filing be made public only after a jury is selected. U.S. District Judge Rebecca Pallmeyer agreed that releasing the new information means it could take longer to find impartial jurors, but ruled that inconvenience doesn't trump the tenet that court proceedings remain open to the public. She also indicated Ryan wouldn't necessarily benefit by delaying the document's release. "The sooner we get this out," Pallmeyer said, "the sooner it becomes yesterday's news." Chris Hack may be reached at chack@dailysouthtown.com or (708) 633-5984.