Monday, December 01, 2008

Criminal Complaint (6): Facts Establishing Probable Cause, Information Provided by Stuart Levine

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(Part 6: criminal complaint against Gov. Rod Blagojevich and John Harris. It was posted 12-22-08, but has been back-dated to bump it down. Some emphasis has been added.

Mentioned on this page: Indictments against Levine (mail and wire fraud, extortion, bribery, and money laundering); corruption of the Illinois Health Facilities Planning Board (the "Planning Board"); Teachers Retirement System ("TRS"), Mercy Hospital, Illinois Road and Transportation Builders Association; Friends of Blagojevich, Levine's testimony at the Rezko Trial, Tony Rezko, Chris Kelly, Thomas Beck, Imad Almanaseer, William Cellini.

_________ 3. Information Provided by Stuart Levine

31. In approximately December 2003, the FBI began an investigation of allegations that at least one member of the Illinois Health Facilities Planning Board (the "Planning Board"), Stuart Levine, was soliciting bribes in exchange for board action. At the time, Levine was a businessman who served on two state boards: the board of trustees of TRS, and the Planning Board. As part of the investigation, the government sought and obtained court authorization to record phone calls on multiple phones used by Levine.

32. On May 4, 2005, Levine was indicted in United States v. Levine, et al. 05 CR 408 (Grady, J.) on 28 counts of mail and wire fraud, extortion, bribery, and money laundering. On August 3, 2005, Levine was indicted in United States v. Levine, et al., 05 CR 691 (St. Eve., J.) on 13 counts of mail and wire fraud, bribery, and attempted extortion. On October 27, 2006, Levine pleaded guilty to Counts One and Twenty-Three of a superseding indictment in Case No. 05 CR 691. As part of Levine's plea agreement, the government moved, on November 15, 2006, to dismiss the pending superseding indictment and indictment against Levine in Case No. 05 CR 408.

33. Pursuant to his cooperation agreement, the government has interviewed Levine extensively regarding a number of topics, including his knowledge of and involvement in the corruption of Illinois state government and fundraising for ROD BLAGOJEVICH. In addition, Levine testified under oath at the Rezko Trial.[8] Portions of Levine's testimony at the Rezko trial are directly relevant to the current investigation. The remainder of this section sets forth, in summary, and in relevant part, Levine's testimony at the Rezko Trial, except as noted where information is specifically identified as having been obtained from other sources:

a. Levine's Plane Ride with Blagojevich

34. According to Levine, in approximately late October 2003, after Levine was reappointed to the Planning Board, he shared a private plane ride from New York to Chicago with ROD BLAGOJEVICH and Kelly. Levine, ROD BLAGOJEVICH, and Kelly were the only passengers on the flight. According to Levine, at the beginning of the flight, Levine thanked ROD BLAGOJEVICH for reappointing him to the Planning Board. ROD BLAGOJEVICH responded that Levine should only talk with "Tony" [Rezko] or [Kelly] about the Planning Board, "but you stick with us and you will do very well for yourself." ROD BLAGOJEVICH said this in front of Kelly. According to Levine, Levine understood from ROD BLAGOJEVICH's manner of speaking and words that ROD BLAGOJEVICH did not want Levine to talk to ROD BLAGOJEVICH directly about anything to do with the boards, but that Levine should talk to Rezko or Kelly. Levine also understood that ROD BLAGOJEVICH meant that Levine could make a lot of money working with ROD BLAGOJEVICH's administration. According to Levine, ROD BLAGOJEVICH did not seem to expect a response from Levine, and Kelly then shifted the conversation to something else.

b. Corruption of the Planning Board

35. As described more fully in the following paragraphs, Mercy Hospital, which sought permission from the Planning Board to build a hospital in Illinois, received that permission through Rezko's exercise of his influence at the Planning Board after Rezko was promised that Mercy Hospital would make a substantial campaign contribution to ROD BLAGOJEVICH. Rezko later told a member of the Planning Board that Mercy Hospital received the permit because ROD BLAGOJEVICH wanted the organization to receive the permit.

36. Levine's criminal activities included his abuse of his position on the Planning
Board to enrich both himself and Friends of Blagojevich. The Planning Board was a commission of the State of Illinois, established by statute, whose members were appointed by the Governor of the State of Illinois. At the relevant time period, the Planning Board consisted of nine individuals. State law required an entity seeking to build a hospital, medical office building, or other medical facility in Illinois to obtain a permit, known as a "Certificate of Need" ("CON"), from the Planning Board prior to beginning construction.

37. Levine, as well as Planning Board members Thomas Beck and Imad Almanaseer, testified under oath at the Rezko Trial.[9] Beck testified that he asked Rezko to reappoint him to the Planning Board and that Beck thereafter followed Rezko's directions regarding which CON applications Rezko wanted approved. Beck testified that it was his job to communicate Rezko's interest in particular CONs to other members of the Planning Board, including Almanaseer, who were loyal to Rezko. Beck testified that he understood that Rezko spoke for the Blagojevich administration when Rezko spoke to Beck about particular CONs. Almanaseer testified that Beck instructed him that Rezko wanted Almanaseer to vote a particular way and that Almanaseer should follow Levine's lead in voting on CONs. Almanaseer testified that before certain Planning Board meetings, he received notecards from Beck indicating how to vote on certain CON applications. Beck testified he provided these notecards to Almanaseer and certain other members of the Planning Board to communicate Rezko's directions about certain CON applications.

38. During his testimony, Levine described a plan to manipulate the Planning Board to enrich himself and Friends of Blagojevich. The plan centered on an entity commonly known as Mercy Hospital ("Mercy") that was attempting to obtain a CON to build a new hospital in Illinois. Levine knew the contractor hired to help build the hospital. In approximately November 2003, on behalf of the contractor, Levine checked with Rezko to determine whether Rezko wanted Mercy to obtain its CON. Rezko informed Levine that Mercy was not going to receive its CON. According to Levine, he asked Rezko whether it would matter to Rezko if Mercy's construction contractor paid a bribe to Rezko and Levine and, in addition, made a contribution to ROD BLAGOJEVICH. Levine testified that Rezko indicated that such an arrangement would change his view on the Mercy CON.[10]

39. Levine's testimony regarding Rezko's actions to change the Planning Board decision concerning Mercy's application for a CON based on contributions for ROD BLAGOJEVICH is confirmed by attorney Steven Loren. Loren testified at Rezko's criminal trial and, before that, in the grand jury.11 According to Loren, in approximately December 2003, Levine informed Loren that Rezko was against the Mercy CON. According to Loren, Levine relayed to Loren a conversation between Rezko and Levine during which Levine asked Rezko whether a political contribution to ROD BLAGOJEVICH would make a difference for Mercy's CON, and Rezko responded to Levine that such a contribution might make a difference.

40. Thereafter, and confirmed by the testimony of Levine, Beck, and Almanaseer, as well as recorded conversations, Rezko switched his directions to Beck and informed Beck that Mercy was to receive its CON. According to Almanaseer, although he previously had been told by Beck that Rezko did not want Mercy to receive its CON, he was later told that there had been a change and that Rezko now wanted Mercy to receive its CON.

41. Mercy received its CON as a result of a controversial and irregular vote at a public Planning Board meeting.[12] The vote brought significant publicity to the Planning Board and ultimately led to the disbanding of the Planning Board. Almanaseer testified under oath in the grand jury that not long after the Planning Board vote on Mercy's CON he saw Rezko at a fundraiser. According to Almanaseer, he was still embarrassed about what had occurred at the Planning Board vote on Mercy's CON and Rezko's role in the vote. Almanaseer testified that he asked Rezko why Rezko had switched the vote on the Mercy CON. According to Almanaseer, Rezko stated: "The Governor wanted it to pass."
Almanaseer understood the reference to "Governor" to be a reference to ROD BLAGOJEVICH.

c. History of Control at TRS

42. In addition to serving on the Planning Board, Levine was a member of the TRS board of trustees. TRS is a public pension plan created by Illinois law for the purpose of providing pension, survivor, and disability benefits for teachers and administrators employed in Illinois public schools except in the City of Chicago. TRS manages over $30 billion in assets on behalf of those individuals and the State of Illinois. The TRS Board of Trustees, with assistance from TRS staff, votes on how to invest these assets.

43. Levine originally was appointed to the TRS Board in 2000. By the summer of 2001, Levine, working in concert with William Cellini, who had a significant interest in a real estate asset management firm that had a long-standing business relationship with TRS, had established effective control over the TRS board by forming and maintaining a group of TRS trustees who consistently voted together on matters important to Cellini and Levine. Levine testified at the Rezko Trial that he and Cellini were both powerful, long-standing Republican operatives in the state of Illinois. ROD BLAGOJEVICH was the first Democratic governor in the State of Illinois in over 20 years. Because of this, according to Levine, Cellini and Levine had to take certain steps to ingratiate themselves with the new Democratic administration.

44. Levine testified that among the steps Cellini took to ingratiate himself with ROD BLAGOJEVICH was raising considerable money for ROD BLAGOJEVICH. Kelly Glynn worked for Friends of Blagojevich from approximately May 2002 to August 2004 as the organization's Finance Director. Glynn testified under oath at the Rezko Trial and has been interviewed by the government. Among other things, Glynn testified that she was familiar with how Friends of Blagojevich tracked fundraising events and credited money brought into Friends of Blagojevich. Glynn testified that a computer database was set up to track donations to Friends of Blagojevich and the individuals responsible for obtaining those donations. In particular, Glynn testified about a fundraising event that occurred in approximately October 2002. Glynn testified that the event was organized and held by Cellini with the attendees being primarily members of the Illinois Road and Transportation Builders Association. Based on instructions from Chris Kelly, however, the Cellini event was not tracked as a Cellini event in the Friends of Blagojevich database but, rather, was listed as a Roadbuilders event in combination with, among others, Rezko.

d. The Accommodation with Rezko and Kelly

45. As set forth more fully in the following paragraphs, Levine and Cellini, in order to keep their control over TRS, agreed to an accommodation with Rezko and Kelly that Rezko and Kelly would use their influence with ROD BLAGOJEVICH to stop the consolidation of TRS with other pension boards and, in exchange, Levine and Cellini would assist investment firms named by Rezko and Kelly to receive TRS money because those investment firms had made or would make political contributions to ROD BLAGOJEVICH.

46. In approximately the spring of 2003, a threat arose towards Levine's and Cellini's control over the TRS Board. At that time, there were indications that the Blagojevich administration would seek legislation consolidating TRS with two other Illinois state pension boards.

47. Levine and Cellini were opposed to the proposal to consolidate the pension boards because it might cause them to lose their control at TRS. According to Levine, in the spring of 2003, Cellini told Levine that Cellini would talk to Rezko and Kelly about trying to stop the pension consolidation plan. Cellini later told Levine that he had spoken with Rezko and Kelly, and offered an accommodation to them. According to Levine, in exchange for Rezko's and Kelly's help in stopping the consolidation proposal, Cellini said that Cellini and Levine would use their influence on the TRS Board to help investment firms that Rezko or Kelly recommended receive investments from TRS. Cellini said that Rezko and Kelly agreed to the arrangement. Levine understood from Cellini's description that Rezko and Kelly would ask Levine and Cellini to help investment firms receive TRS money because those investment firms had made or would make political contributions to ROD BLAGOJEVICH.[13]

48. Levine's testimony regarding the accommodation was corroborated by a recorded call on April 12, 2004, in which Levine informed another individual: "You know I sat down talked [to Cellini] a long time ago I said if you can convince those guys [Rezko and Kelly] to let us stay in place. . . We got a great machinery and if there's an accommodation you know we'll certainly try to accommodate but if they just wanna stick things in you know I'm gonna leave that's no way to do that."

49. According to Levine, Cellini told Levine that Rezko had informed Cellini that Rezko and Kelly had met with ROD BLAGOJEVICH and other senior Illinois state officials regarding the proposal to consolidate TRS and two other pension boards. According to Levine, Cellini said that Rezko related that ROD BLAGOJEVICH was skeptical as to why he should take the advice of Kelly over a senior state official on this topic. According to Levine, Rezko asked Cellini, who asked Levine, to get some talking points as to why the consolidation idea was a bad one. Levine ultimately obtained talking points from Steve Loren, TRS's outside counsel.

50. Ultimately, the proposal to consolidate the state pension boards was not advanced in the Spring 2003 legislative session. According to Levine, Levine told Loren that Kelly and Rezko had assured him that the administration was going to leave TRS alone. According to Levine, around that time, Levine and Rezko agreed that there would be times that Rezko or ROD BLAGOJEVICH needed to repay political contributors by helping those people get investments from TRS. According to Loren, Levine told Loren that in exchange for Rezko and Kelly's support on the pension issue, Levine had agreed with Rezko and Kelly that from time to time Rezko and Kelly would be allowed to direct the payment of placement fees in TRS transactions. Loren understood this to mean that Rezko and Kelly would use these placement fees as an incentive or reward to those who contributed to ROD BLAGOJEVICH. Loren further understood that Rezko and Kelly would be able to steer free money to the people whom they selected, and those people would get money without providing any services in relation to TRS transactions.

51. According to Levine, there were occasions when Rezko or Kelly provided names of funds or individuals to Levine. According to Levine, Levine brought those funds or individuals to the attention of TRS staff and otherwise tried to help those funds or individuals obtain TRS business. There were times, however, where Levine was unable to arrange for TRS to invest in an entity suggested by Rezko or Kelly because the recommendations did not meet the basic TRS investment criteria (e.g., TRS did not invest in hedge funds at that time, so if Rezko or Kelly recommended a hedge fund, Levine could not help that entity).

[Footnote 8] As noted above, Levine was charged in two separate indictments before pleading guilty in Case No. 05 CR 691. In Levin's plea agreement, Levine acknowledged that under the Sentencing Guidelines he was facing a guidelines range of life imprisonment. As a result of Levine's plea, the government will recommend, assuming Levine's continued complete and truthful cooperation, that Levine be sentenced to a term of 67 months' imprisonment. In Levine's plea agreement, Levine admitted to violating his duty of honest services to two separate Illinois state boards by seeking and agreeing to accept kickbacks and payments worth millions of dollars in exchange for using Levine's influence and position on the state boards to benefit numerous third parties. Levine further admitted in his plea agreement to defrauding a medical school and a charitable organization which he controlled out of additional millions of dollars. In addition to the crimes detailed in his plea agreement, Levine committed additional crimes over the past approximately 20 years, including instances of paying bribes, tax fraud, election fraud, structuring, and defrauding the estate of a business associate. Levine has further admitted to using illegal narcotic drugs for approximately 30 years up to and including 2004, including the repeated and regular use of cocaine, crystal methamphetamine, ecstasy, and ketamine. Levine's credibility was vigorously challenged by defense counsel during the trial that ultimately led to Rezko's conviction.

[Footnote 9]: Beck and Almanaseer testified pursuant to immunity orders.

[Footnote 10]: Rezko has admitted that he manipulated the Mercy vote based on Mercy's agreement to make a contribution to ROD BLAGOJEVICH, which agreement he states was communicated to ROD BLAGOJEVICH, but denies that Levine offered a personal bribe to Rezko as well.

[Footnote 11]: In connection with this investigation, Steven Loren pled guilty to interfering with the due administration of the Internal Revenue Service. In exchange for his continued and truthful cooperation, the government has agreed to move the Court for a 5K1.1 departure and his counsel is free to seek any sentence, including probation. Loren has no other criminal history. Pursuant to his cooperation agreement, Loren testified at the Rezko Trial.

[Footnote 12]: There was extensive testimony regarding the irregularity of the vote at the Planning Board meeting. In summary, during the vote, Levine got up from his seat and went to speak to Beck and to Almanaseer. After these discussions, Almanaseer then changed his vote to be in favor of Mercy receiving its CON. Beck then voted in favor as well and by a vote of 5 to 4, Mercy's application for a CON passed.

[Footnote 13] Rezko has informed the government that Cellini raised the issue of pension board consolidation with Rezko and Chris Kelly and that Cellini was against the pension board consolidation. Rezko has stated he is unaware if Kelly took any action regarding the pension consolidation and that he did not personally take any action in relation to the pension board consolidation. Rezko has stated he did not consider using TRS to solicit campaign contributions.

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