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The recap of the trial thus far of former Illinois Governor Rod Blagojevich, from the coverage of the Chicago Tribune's "Blagojevich on Trial" Blog and the Springfield State Journal-Register's Blagojevich trial coverage continues.

Thursday, June 17, 2010: Former Democratic Party fundraiser Joseph Cari testifies that Blagojevich spoke with him about presidential ambitions and getting contributions from businesses in exchange for awarding state business. Cari states that Antoin “Tony” Rezko told him he made decisions as to who got state work. Cari also testifies that he pressured venture capital firm JER, which was seeking to gain an $80 million allocation from Illinois’ teacher’s pension panel, to hire a consultant designated by Rezko, who would be paid a large finder’s fee. The defense gets Cari to admit that Stuart Levine—not Blagojevich—told Cari that JER would not receive the pension investment business unless it hired the consultant. Cari does admit that JER received the allocation even though it did not ultimately hire the consultant. Blagojevich’s attorneys point out that Cari did not tell federal investigators about his alleged conversations with Blagojevich until 82 days after they first contacted him, and attempts to portray Cari as lying to prosecutors in order to obtain a plea deal. Former Illinois Director of Boards and Commissions Jill Hayden testifies that she gave the most weight to recommendations by Rezko and Chris Kelly in selecting candidates to fill State boards. Rezko and Kelly selected five of the nine member Illinois Finance Authority (IFA). Hayden testifies that Rezko also called her and told her Levine needed to be reappointed to the Illinois Teacher’s Retirement System Board. Blagojevich aid Alonzo “Lon” Monk subsequently contacted Hayden and told her not to take any more calls from Rezko because the FBI had tapped his phones. Ali Ata, former head of the IFA, testifies that, in August 2002, he met with Blagojevich, Rezko, Kelly and legislator Jay Hoffman and gave Blagojevich $25,000 in return for a position in the administration. He states that gave Blagojevich another $25,000 in 2003 at Rezko’s request, and that Blagojevich had thanked Ata and said that he knew he was considering a job with the administration and that it had better be a job where Ata could “make some money.” Ata testifies that Rezko also came to him while he was Chief of the IFA seeking $16 million to refinance his restaurant businesses, stating that he would get the Governor to approve it. Ata states that he did not support the plan. Ata testifies that Rezko promised him a job on the Capital Development Board, but that the position was given to someone else. He also states that Rezko became increasingly paranoid about being bugged by federal investigators. On cross-examination, the defense attempts to have Ata admit that Blagojevich himself never informed Ata that he was receiving a State post in exchange for his campaign contributions.

Monday, June 21, 2010: John Johnston, owner of the Maywood and Balmoral race tracks, testifies that Lon Monk came to see in December of 2008 and asked him for a contribution right before the Governor signed legislation extending subsidies for race tracks. E-mails are introduced indicating that former U.S. Representative and White House Chief of Staff Rahm Emanuel supported Blagojevich in 2006 in exchange for the State authorizing a $2 million grant for construction of athletic fields for the Academy for Urban School Leadership, a school in Emanuel’s district. Former Deputy Governor Bradley Tusk testifies that Emanuel contacted him when the grant money for the school was held up, and that Blagojevich’s advisors said that the Governor wanted Emanuel’s brother, a wealthy Hollywood agent, to hold a fundraiser for the Governor. Tusk requested that Emanuel write a letter to the Chicago Tribune in support of the Governor’s programs. He also testifies that he met frequently with Rezko and Kelly during his tenure as Deputy Governor, and that he signed checks for Blagojevich when the Governor was not present. John Harris, Blagojevich’s Chief of Staff, testifies that Blagojevich had stated to him that he wanted to run for President. Harris testifies that Blagojevich directed him to block two investment firms from getting any State business on the grounds that the firms had failed to hire the Governor’s wife, Patti Blagojevich. Harris also testifies that Blagojevich was interested in finding a State position for his wife, including on the Illinois Pollution Control Board.

Tuesday, June 22, 2010: Harris testifies that Blagojevich became increasingly worried about his finances, including his legal bills of approximately $1.7 million from the law firm of Winston & Strawn. Blagojevich paid his legal expenses from his campaign funds. Harris testifies that Blagojevich considered appointing Illinois Senate President Emil Jones, and even himself, to the U.S. Senate seat vacated by President Barack Obama. However, when Jones caused an ethics bill which Blagojevich opposed to pass the Senate, Blagojevich allegedly told Harris that there was no way Jones would get the seat. Harris testified that he had conversations with Blagojevich regarding “how much” he could get for the Senate seat, including from wealthy businessmen Blair Hull and J.B. Pritzker. Harris testified that he and General Counsel Bill Quinlan told Blagojevich not to consider such ideas. Harris testified that Rahm Emanuel telephoned him and told him that President Obama was interested in having Valerie Jarrett, former Chairman of the Chicago Transit Authority, appointed to fill the seat. The prosecution plays an audio recording of a conversation between Blagojevich and Harris regarding Emanuel’s suggestion of Jarrett. Blagojevich asks Harris on tape what he can get for appointing Jarrett, including a potential appointment as Secretary of the U.S. Department of Health and Human Services.
 

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 Since the prosecution of former Illinois Governor Milorad R. “Rod” Blagojevich has rested its case, we take the opportunity to recap the testimony and evidence in the first 23 days of the trial, drawing upon the excellent coverage of the Chicago Tribune’s “Blagojevich on Trial” Blog, and also WGN-TV Team 9's Trial Coverage. For the serious follower of the trial, the U.S. District Court for the Northern District of Georgia has also made available virtually all the pleadings, exhibits and recordings from the trial to the public, which may be perused here.

 Thursday, June 3, 2010: The trial of Blagojevich and his brother and co-defendant, Robert Blagojevich, begins in the U.S. District Court for the Northern District of Illinois in Chicago, U.S. District Judge James Zagel presiding. Blagojevich’s attorney, Sheldon Sorosky confirms that the defense has subpoenaed numerous individuals, including U.S. Senator and Senate Majority Leader Harry Reid, U.S. Senator Dick Durbin, U.S. Representative Jesse Jackson, Jr., White House Chief of Staff Rahm Emanuel and Presidential advisor Valerie Jarrett. Judge Zagel denies petitions from the media to disclose the identities of jurors. Jury selection begins.

Friday, June 4, 2010: Jury selection continues. Blagojevich speaks to media and states that he has been falsely accused, and will be vindicated.

Monday, June 7, 2010: Jury selection continues.

Tuesday, June 8, 2010: A jury of 11 women and seven men—12 jurors and six alternates—is selected. The defense files motion alleging that Blagojevich’s First Amendment right to free speech was “criminalized.” Judge Zagel rules that no “twittering” is allowed in the courtroom. Assistant U.S. Attorney Carrie Hamilton give opening statement for prosecution. Hamilton argues that Blagojevich had more than $200,000 in debt and viewed the election of former U.S. Senator for Illinois Barack Obama as President of the United States as a financial opportunity. The prosecution alleges that Blagojevich sought to be appointed Secretary of the U.S. Department of Health and Human Services (HHS) and for millions of dollars in donations to a charitable organization which Blagojevich would control in exchange for appointing Valerie Jarrett to Obama’s vacant Senate seat. Hamilton argues that Blagojevich later sought $1 million from Jesse Jackson, Jr., in exchange for the appointment. Blagojevich viewed the vacancy as a “golden ticket.” The prosecution also argues that Blagojevich, convicted real estate developer Antoin “Tony” Rezko, Christopher Kelly and Blagojevich’s former Chief of Staff, Alonzo “Lon” Monk, conspired to extort kickbacks from companies seeking business from the state. Rezko allegedly made payments of $12,000 per month to Blagojevich’s wife, Patti Blagojevich. Blagojevich is also alleged to have extorted tens of thousands of dollars from Children’s Memorial Hospital in Chicago in exchange for obtaining reimbursements for the hospital, and to have attempted to extract campaign contributions from then-U.S. Representative Rahm Emanuel in exchange for a $2 million grant to a school in Emanuel’s district. Blagojevich attorney, Sam Adam, Jr., argues that Blagojevich didn’t receive a dime from the alleged scheme. Adam argues that Blagojevich was naïve in trusting others, including Rezko.

Wednesday, June 9, 2010: FBI agent Daniel Cain testifies regarding the investigations of Rezko and Blagojevich. Lon Monk, Blagojevich’s former campaign manager, who pled guilty to conspiring to solicit a bribe and is cooperating with the government, testifies to Blagojevich’s fundraising in the 2002 campaign. Monk testifies that Blagojevich, Rezko, Chris Kelly and Monk had a meeting in 2003 to discuss how to profit from action by the state. Rezko listed nine money-making ideas and the participants agreed to divide the profits equally. Kelly, who owned a roofing company, committed suicide in 2009, and the Court prohibited any mention of him to the jury. Monk testifies that he and Rezko also gave their opinions on who should receive senior positions in Blagojevich’s administration. He testifies that Blagojevich and Rezko obtained a $500,000 kickback from lobbyist Robert Kjellander in exchange for selecting Bear Stearns to sell a $10 billion pension bond deal in 2003. Monk testifies that Rezko tried to start an insurance company using his connections, the profits from which would be divided with Blagojevich and Monk.

Thursday, June 10, 2010: Lon Monk testifies regarding Blagojevich’s appointments of donors donating $25,000 or more to State boards and commissions. He states that Rezko allegedly “hired” Patti Blagojevich and paid her a $150,000 retainer, despite the fact that Ms. Blagojevich performed no work. Monk testifies that Blagojevich entered an agreement with Illinois State Senator and Senate President Emil Jones to not override Blagojevich’s veto of a bill which would have limited fundraising in campaigns for governor. The prosecution plays a recording of a telephone conversation between Blagojevich and Monk about getting $4 million in campaign fundraising, with Blagojevich yelling at Monk to contact prior donors to send $5,000 or whatever they can send. Prosecutors play recordings of telephone conversations, including a conversation in which Blagojevich and Monk discuss Jesse Jackson, Jr. Monk testifies that Blagojevich instructed him to attempt to obtain a $500,000 donation from Jerry Krozel, head of a road construction association, in exchange for announcing $5 billion in toll road funding, before a new ethics law banning such large donations took effect.

Photo from Cleveland.com

Monday, June 14, 2010: Monk testifies that he felt pressure to bring in campaign funds. He testifies that Blagojevich met with him in 2008 and said that he wanted to meet with race track owner John Johnston and obtain a $100,000 donation, allegedly in exchange for signing legislation which would save money for Illinois race tracks. The defense cross-examines Monk. Michael Ettinger, attorney for Robert Blagojevich, gets Monk to admit that Rod kept his brother out of the political end of things, including the meeting concerning Johnston. Sam Adam asked Monk whether it was a crime for a politician to accept a campaign contribution for state action if there was no quid pro quo, or something offered in exchange. Monk subsequently responded that it was not. Adam questioned Monk regarding whether Blagojevich had ever indicated that he would not sign the race track legislation if Johnston did not make a campaign contribution.

Tuesday, June 15, 2010: Blagojevich’s counsel continue their cross-examination of Monk. Monk admits that he occasionally lied to Blagojevich in order to stop Blagojevich from bothering him about fundraising. Monk repeatedly admits that he does not remember specifics of meetings with Blagojevich, Rezko and Kelly. The defense points out that Monk accepted several $10,000 cash gifts from Rezko allegedly in exchange for his involvement in the scheme, however Monk had signed a statement for the prosecution stating that the amounts were gifts with no quid pro quo attached. Monk admits that he lied to the FBI in an earlier interview. The defense tries to suggest that Blagojevich knew nothing about the cash or illegal acts involving Monk and Rezko. Monk admits that Blagojevich never told him he would withhold the funding for the toll roads if he did not receive a contribution. David Abel, a public finance quantitative technician, testifies regarding a meeting with Blagojevich, Kelly and staffers regarding the $10 billion pension bond issue. Abel admits on cross-examination that Bear Stearns was rated as highly qualified to do the deal. Vincent Mazzaro, a member of Bear Stearns’ municipal bond department, testifies that the manager of the department would have hired Robert Kjellander, who allegedly paid a $500,000 kickback to Rezko to ensure that Bear Stearns was selected as elite manager for the sale of the bonds. Kjellander would receive a “success fee,” in this case $809,000. Joseph Aramanda, a friend of Rezko’s, testifies that Kjellander loaned him hundreds of thousands of dollars at Rezko’s direction to support Papa John’s pizza franchises which Aramanda had purchased from Rezko. Aramanda testifies that Kjellander did not ask for any documentation for the loan. He testifies that Rezko contacted him following his receipt of the loan proceeds and asked him to pay various individuals and entities whom Rezko owed money to. Aramanda also testifies that Rezko told him he was involved in appointments for cabinet positions in Blagojevich’s administration, and offered Aramanda a position in the Illinois Department of Aging. Rezko also approached Aramanda about being a middleman between the Illinois Teachers Retirement System (TRS) and investment firms seeking to invest TRS monies. Aramanda testified that Rezko introduced him to Sheldon Perkin, another middle man, and that he and Perkin received $375,000 each from a $50 million investment deal between TRS and Glencoe Capital.

Wednesday, June 16, 2010: Joseph Aramanda testifies that Sheldon Perkin paid him $375,000, in three installments, on the TRS/Glencoe Capital, deal despite the fact that he did no work on the deal. Rezko asked Aramanda to divert $50,000 from the first installment to the sister of one of Rezko’s business associates. Aramanda testifies that Rezko told him that he could earn at least $1 million a year in finder’s fees for securing state pension monies for investment firms. Rezko told Aramanda that he would take a cut of the fees paid to Aramanda and would share them with Blagojevich, Lon Monk and Chris Kelly. Armanda stated that when Rezko told him about the arrangement, he became uncomfortable and withdrew from the agreement. Blagojevich attorney Michael Gillespie questions Aramanda about making a $10,000 contribution in 2004 to Barack Obama’s campaign for the U.S. Senate. The prosecution plays audio recordings of telephone conversations in which Blagojevich discusses the interest Illinois businessman Blair Hull, who donated $467,000 to Blagojevich’s 2002 campaign, in the vacant U.S. Senate seat. Blagojevich calls Hull “an idiot.” IRS agent Shari Schindler testifies that, in investigating Rezko, the government found monies going to Chris Kelly and River Realty, a company affiliated with Patti Blagojevich. Joseph Cari, a former national Democratic fundraiser, testifies that he had a conversation with Blagojevich in 2003 regarding Blagojevich running for president, in which Blagojevich told him he would approach businesses for contributions in exchange for awarding state business. The prosecution requests a gag order for Blagojevich and his counsel to prevent them from making public comments and influencing the jury. Judge Zagel states that he will take up the request later.

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On Monday, the SEC filed a Complaint for Injunctive and Other Relief, in Federal court in Tampa, Florida, which may be viewed here, against Neil V. Moody and Christopher D. Moody, managers of the hedge funds Valhalla Investment Partners, L.P., Viking IRA Fund, LLC, and Viking Fund, LLC. Neil Moody, 71, and his son Christopher D. Moody, 35, are co-owners of the funds, based in Sarasota, Florida.

The Complaint charges that the Moodys allegedly recklessly violated anti-fraud provisions of Federal securities laws. Specifically, the SEC alleges that, from 2003 to 2009, the Moodys allegedly overstated investment returns and the value of the funds' assets by as much as $160 million in account statements provided to investors and offering materials provided to prospective investors. The Complaint also charges that the Moodys allegedly recklessly misrepresented to investors that they actively managed the funds, when in fact the investment and trading activities of the funds were managed by a third-party, namely Arthur Nadel of Scoop Management. Nadel, however, was the operator of a large Ponzi scheme involving hundreds of investors, including investors in the Moodys' hedge funds. Nadel allegedly fabricated false performance and account information which overstated the value of the Moodys' funds, and shared management and performance fees with the Moodys. The SEC filed an emergency action against Nadel in the Middle District of Florida last January, and was indicted in the Southern District of New York in April on six counts of securities fraud, eight counts of wire fraud, and one count of mail fraud.

Counsel for Christopher Moody has responded to the Complaint. “The SEC's complaint does not allege that Chris Moody knowingly intended to harm investors. The complaint alleges recklessness which Mr. Moody neither admits nor denies. Mr. Moody has cooperated from the outset with the receiver in the recovery of assets and will continue to do so,” said Mr. Moody’s attorney, Jeffrey L. Cox, of Sallah & Cox, LLP.

The Complaint alleges violations of Sections 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b); Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a); Section 206(4) of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-6(4); Exchange Act Rule 10b-5, 17 C.F.R. § 240.10b-5; and Advisers Act Rule 206(4)-8, 17 C.F.R. § 275.206(4)-8. It seeks declaratory relief, a permanent injunction against the Moodys, disgorgement of all profits and civil penalties. A Receiver has been appointed for the funds.

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