SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
Today’s long read

Tuesday, Aug 19, 2014

* The AP doesn’t do this opinion justice

A federal appeals court has taken on the issue of pay-to-play corruption in Illinois under disgraced ex-Gov. Rod Blagojevich.

The U.S. 7th Circuit Court of Appeals reinstated a lawsuit by riverboat casinos in a late Friday ruling. The suit alleges that racetrack owners bribed Blagojevich to push through legislation that transferred 3 percent of casino revenue to the racetracks.

The Chicago-based court says the case required it to “once again to decide whether some shenanigans” in the Legislature “and governor’s office crossed the line from the merely unseemly to the unlawful.”

* This is an almost literary, well thought-out and quite reasonable opinion

Deals are the stuff of legislating. Although logrolling may appear unseemly some of the time, it is not, by itself, illegal. Bribes are. This case requires us once again to decide whether some shenanigans in the Illinois General Assembly and governor’s office crossed the line from the merely unseemly to the unlawful. It involves a subject we have visited in the past: two industries that compete for gambling dollars. […]

In 2006 and 2008, former Governor Rod Blagojevich signed into law two bills (to which we refer as the ’06 and ’08 Acts) that imposed a tax on certain in‐state casinos of 3% of their revenue and placed the funds into a trust for the benefit of the horseracing industry. Smelling a rat, the plaintiff casinos brought suit under the federal Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1964, alleging that the defendants, all members of the horseracing industry, had bribed the governor to ensure that the bills were enacted. Viewing the evidence in the light most favorable to the plaintiffs (and of course not vouching for anything), we conclude that there was enough to survive summary judgment on the claim that the governor agreed to sign the ’08 Act in exchange for a bribe. […]

Illinois legalized riverboat casino gambling in 1990. Ever since, the state’s once‐thriving horseracing industry has been in decline. In late 2005 and early 2006, the state General Assembly considered legislation to help the horseracers. One bill would have imposed a 3% tax on casinos earning more than $50 million annually and deposited the proceeds into a fund for the benefit of the horseracing industry. It was modeled on similar initiatives in three other states. Lobbying on all sides was intense. On the first few votes in the General Assembly, the bill failed to garner a majority.

The bill’s fortunes changed later in the spring of 2006. For one thing, it was modified so that the tax applied only to casinos earning more than $200 million annually, thereby limiting its effect to the large casinos in northern Illinois near Chicago. For another, Governor Blagojevich began to take an interest in the matter after his senior aide and alleged pay‐toplay facilitator, Christopher Kelly, met with a horseracing executive, John Johnston. On the floor of the General Assembly, the bill’s opponents cried foul. “Why are some of you called down to the Governor’s office, then you come back up and change your vote?” asked Representative William Black. Added Representative Brent Hassert, “The Governor has weighed in on [the ’06 bill] … heavily in the last night or so, calling people and asking people to vote on this. It is my understanding … that there’s promises have been made to support this bill.” Soon after, the ’06 Act cleared the House by a vote of 70‐32; a week later, the Senate passed it 40‐16. Governor Blagojevich signed the bill into law the next day. Johnston and other racing executives thanked the governor for his support of the bill in a personal letter. Using various subsidiaries, they then contributed $125,000 to his campaign fund.

“Smelling a rat.”

Heh.

Chief Judge Diane Wood is one heck of a story teller. She had me locked in from the opening paragraph and I just couldn’t stop reading.

* The court found no addressable legal issues with the original 2006 bill

The Casinos have not pointed to evidence that would allow a factfinder to conclude that the Racetracks’ alleged bribery scheme caused the legislature to pass the ’06 Act. To begin with, the Casinos make no allegation and have no evidence that the Racetracks ever bribed or attempted to bribe state legislators. Nor do the Casinos point to evidence that the governor agreed to exert improper influence over state legislators in order to win their support of the ’06 Act in exchange for a bribe. […]

The worst comment the Casinos identify is Rep. Hassert’s obviously inadmissible statement that it was his “understanding … [that] promises [were] made to support this bill.” Not only is that comment an out‐of‐court statement offered to prove the truth of the matter asserted; the underlying sentiment is not based on personal knowledge… Worse, we have no idea what promises he was talking about. If the promise referred to support for re‐election, or a commitment to cosponsor a bill, without any taint of bribery, nothing would be wrong. […]

The record contains no admissible evidence that Governor Blagojevich unduly pressured members of the legislature to support the ’06 Act. Nor is there competent evidence that would permit an inference that any identifiable group of legislators “voted as a bloc” at the governor’s behest. No legislator was bribed. It takes more than the Casinos have shown here to support their proposed conclusion that the workings of an entire state legislature were coopted by the bribery of one official. […]

Evidence is similarly lacking to support a finding that the Racetracks bribed Governor Blagojevich to sign the ’06 Act into law. The Casinos point to a meeting between Johnston and Blagojevich’s aide Chris Kelly in 2006 while the Act was stalled in the legislature. But they provide no evidence that Johnston offered Kelly a bribe in exchange for Governor Blagojevich’s signature during that meeting. The letter from the Racetracks to Blagojevich after the ’06 Act passed merely thanked him for his support; it did not suggest that Blagojevich had agreed to sign the bill in exchange for a bribe. The fact that the Racetracks later made campaign contributions cannot, without more, support liability for acts of political corruption. To hold illegal an official’s support of legislation furthering the interests of some constituents shortly before or after campaign contributions are solicited and received “would open to prosecution not only conduct that has long been thought to be well within the law but also conduct that in a very real sense is unavoidable so long as election campaigns are financed by private contributions or expenditures, as they have been from the beginning of the Nation.”

That makes sense.

* The 2008 bill is another matter, however

As with the ’06 Act, the record contains little evidence to show that the Governor’s influence caused the legislature to pass the ’08 Act. But that is not all that the Casinos alleged. They also asserted that the Racetracks and the governor agreed to a quid pro quo: in exchange for the governor’s signature on the ’08 Act, the Racetracks promised to give $100,000 to his campaign fund.

The summary judgment record contains considerable evidence that, if credited, would support the allegation of a quid pro quo between the Racetracks and Governor Blagojevich. When Blagojevich did not immediately sign the ’08 Act into law, Racetracks executive Johnston stated to a colleague in an email: “We are going to have to put a stronger bit in his mouth!?!” Johnston complained to Blagojevich’s chief of staff Monk that the delays in signing the bill were costing Johnston $9,000 per day. A factfinder could conclude that Blagojevich was talking about Johnston’s commitment to pay $100,000 when he informed Monk that he would “like some separation between that and signing the bill.” After the FBI recorded Monk and Blagojevich scheming about getting Johnston to pay, Monk met with Johnston and, according to Monk, delivered the message that the bill would not be signed until he paid. According to Monk, Johnston countered with an offer to pay half the money at once and half later. Monk called Blagojevich immediately after the meeting with Johnston to report his belief that Johnston would soon pay. After learning of the criminal allegation that Blagojevich threatened not to sign the ’08 Act bill unless he was paid $100,000 by someone in the horseracing industry, Johnston admitted, “I didn’t know if anybody else had given 100,000, but I knew I did.” Finally, Johnston signed an immunity agreement in which he acknowledged that he had information that “may tend to incriminate” him. From this and other evidence in the record, a reasonable juror could conclude that the Racetracks agreed to pay $100,000 to Blagojevich’s campaign fund in return for his signature on the ’08 Act.

Yep. Agreed.

* Now, on to the conclusion

That brings us to the heart of the matter: Was the Racetracks’ alleged agreement to bribe the governor to sign the ’08 Act sufficiently immediate to serve as a legal cause of the Casinos’ injuries for purposes of RICO? […]

We see nothing in RICO, as the Supreme Court has interpreted it, that would bar the Casinos from pursuing their claim with respect to the ’08 Act. There was no more directly injured party standing between the Casinos and the alleged wrongdoer, and thus no one else to whom they could look for relief; their injuries were not derivative. The money they paid pursuant to the ’08 Act did not compensate the State of Illinois for any losses to the state. Rather, the Casinos themselves suffered the only injury resulting from the Racetracks’ alleged conspiracy to enact the ’08 statute. […]

The ’08 Act taxed only five entities in the entire state. Other taxpayers and citizens were unaffected. Moreover, the Casinos are not challenging the tax itself in this litigation, having lost earlier efforts pursuing that theory. Rather, they seek damages from a private party for an alleged conspiracy to use the power of state government to take money from them. Their injury is easily measured, and it is directly traceable to the Racetracks’ alleged conduct (bribing the governor to sign the ’08 Act) and remediable by this court. […]

In closing, we stress that the only RICO element we are deciding is the issue of proximate cause. To sustain their section 1962(d) conspiracy claim, the Casinos must ultimately show “that (1) the defendant[s] agreed to maintain an interest in or control of an enterprise or to participate in the affairs of an enterprise through a pattern of racketeering activity, and (2) the defendant[s] further agreed that someone would commit at least two predicate acts to accomplish these goals.” … We recognize that our rejection of the Casinos’ claims based on the ’06 Act may have an impact on their ability to show that the defendants agreed to the commission of two predicate acts… or that the defendants “knowingly agreed to perform services of a kind [to] facilitate the activities of those … operating the enterprise in an illegal manner,”

The Balmoral and Maywood tracks could be in deep trouble here.

Also, this is the same court which is deciding what to do about Blagojevich’s appeal of his prison sentence.

- Posted by Rich Miller        


13 Comments
  1. - lake county democrat - Tuesday, Aug 19, 14 @ 11:31 am:

    Is the Blago appeal being heard en banc? Otherwise it could be three entirely different judges. At the lower court level there’s this non-binding principle that once a district court judge makes a call on what an ambiguous area of law means, the other judges will follow it unless they are firmly convinced of a different position (the idea being there should be some predictability within the district). I think appellate court judges feel less bound: they *do* have to follow the precedent of earlier panels but sometimes theory and practice are different: if the issue in the second case isn’t clearly the same as what the earlier panel ruled, they may go off in their own direction.


  2. - Anonymoiis - Tuesday, Aug 19, 14 @ 11:32 am:

    So Pat Quiin’s “honest and trustworthy” former running mate is back in the headlines just as Labor Day approaches. Good timing


  3. - OneMan - Tuesday, Aug 19, 14 @ 11:36 am:

    Seems a logical argument to me…

    Curious if the plaintiffs win at the end of this who ends up paying?


  4. - Formerly Known As... - Tuesday, Aug 19, 14 @ 11:50 am:

    Diane Wood’s work here is phenomenal.

    John Grisham wishes he could write like her.


  5. - OldSmoky2 - Tuesday, Aug 19, 14 @ 11:51 am:

    Supporting legislation in exchange for campaign contributions - who’d have thought that ever happens in our system? Yep, this is very fishy and the racetracks might lose bigtime here, but where is the line? We all know this happens everyday in Springfield, in Washington, in every state capitol. Until and unless we go to public campaign financing and limits on campaign spending, it will continue to happen. Most politicians are smart enough to not leave a trail of direct evidence. Blagojevich was too delusional and too cocky to manage that feat.


  6. - Naperville Tollway - Tuesday, Aug 19, 14 @ 12:00 pm:

    What does it all mean? Blago goes free?


  7. - Sir Reel - Tuesday, Aug 19, 14 @ 12:06 pm:

    I believe it’s called extortion.

    Just imagine what Blago could’ve done if he’d had any influence in the General Assembly.

    He was limited to stalling for dollars.


  8. - Archiesmom - Tuesday, Aug 19, 14 @ 12:17 pm:

    My appellate lawyer pals call her brilliant. Really well-written opinion. The Seventh Circuit has some really heavyweights on it.


  9. - Belle - Tuesday, Aug 19, 14 @ 12:33 pm:

    This reads so well. Plus, it’s so fascinating to see that someone is taking a stab at all of this.
    It will be interesting to see the outcome


  10. - downstate hack - Tuesday, Aug 19, 14 @ 12:33 pm:

    Its time to separate the casinos from the racetracks. The general Assembly needs to pass a gaming bill giving the racetracks slots.


  11. - lake county democrat - Tuesday, Aug 19, 14 @ 12:54 pm:

    Wood would have been so much better a Supreme Court judtice than Sotomayor, who has been pretty much as nondescript as Lawrence Summers predicted.


  12. - Tom Joad - Tuesday, Aug 19, 14 @ 1:14 pm:

    That bill was one of the most obvious pay to play bills during the Blago regime.


  13. - walker - Tuesday, Aug 19, 14 @ 2:54 pm:

    She makes a lot of sense. Is she that clued in? Or was it an especially good lawyer taking her thru the realities of the situation.

    Blago (especially him) had limited power and influence on the GA legislators. So the claim that he caused the bill to be passed, as one part of some quid pro quo with racetrack owners, stumbles at the gate.

    His power was at the veto turn — that’s where the real race began.


Sorry, comments for this post are now closed.


* Delegation goes to bat for Exelon
* Question of the day
* Reach out and touch someone
* *** UPDATED x1 *** "Downton Abbey" story was no random thing
* Most suburban towns could survive a year of state cuts
* Editorial: "Don't fall for Exelon bailout"
* The consequences of cuts
* It's just a bill, but it's interesting
* Martin’s Story: A Medical Error Changed Everything
* SDems upset GOPs by advancing partial FY 15 fix
* Forby asks AG Madigan for formal opinion on right to work zones
* *** LIVE *** Session coverage
* Rate hizzoner's new humble pie TV ad
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* Yesterday's blog posts

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............

...............

...............

...............

...............

...............

...............


Search This Blog...

Search the 98th General Assembly By Bill Number
(example: HB0001)

Search the 98th General Assembly By Keyword

          
        * MWC15: In case you missed it
        * Apple postpones production of larger-display iPads
        * YU coming out with 2nd smartphone dubbed “Project Caesar”
        * Kodi/XBMC app now does auto updating, no need for sideloading
        * Caviar app now available in Android for your food delivery needs
        * Uber partners with Fuhu, adds nabi 2 tablets to uberFAMILY rides
        * Even With Delays, Building A 12.9-Inch iPad Could Be The Easy Part

        * 5 Pinterest Image Styles That People Love to Share
        * New Porsche 911 GT3 RS Video Released
        * Elite Dangerous Launching On Xbox One (video)
        * Waze Updated With AMBER Alert Integration
        * LG G4 Could Sport An Overhauled Design, According To LG Exec
        * New Vaio Android Smartphone Headed To Japan
        * Larger iPad’s Production Delayed To September [Rumor]

        * Konerko humbled by Lifetime Achievement Award
        * Anderson focused on becoming top-notch shortstop
        * Putnam preparing for season with new perspective
        * Quintana comfortable, efficient in White Sox rotation
        * Alexei's 3 RBIs spark White Sox in spring opener
        * Hahn's plan to reshape White Sox slow to boil
        * Minnie was an icon for black fans in Midwest

        ...............


        Main Menu
        Home
        Illinois
        YouTube
        Pundit rankings
        Obama
        Subscriber Content
        Durbin
        Burris
        Blagojevich Trial
        Advertising
        Updated Posts
        Polls

        Archives
        March 2015
        February 2015
        January 2015
        December 2014
        November 2014
        October 2014
        September 2014
        August 2014
        July 2014
        June 2014
        May 2014
        April 2014
        March 2014
        February 2014
        January 2014
        December 2013
        November 2013
        October 2013
        September 2013
        August 2013
        July 2013
        June 2013
        May 2013
        April 2013
        March 2013
        February 2013
        January 2013
        December 2012
        November 2012
        October 2012
        September 2012
        August 2012
        July 2012
        June 2012
        May 2012
        April 2012
        March 2012
        February 2012
        January 2012
        December 2011
        November 2011
        October 2011
        September 2011
        August 2011
        July 2011
        June 2011
        May 2011
        April 2011
        March 2011
        February 2011
        January 2011
        December 2010
        November 2010
        October 2010
        September 2010
        August 2010
        July 2010
        June 2010
        May 2010
        April 2010
        March 2010
        February 2010
        January 2010
        December 2009
        November 2009
        October 2009
        September 2009
        August 2009
        July 2009
        June 2009
        May 2009
        April 2009
        March 2009
        February 2009
        January 2009
        December 2008
        November 2008
        October 2008
        September 2008
        August 2008
        July 2008
        June 2008
        May 2008
        April 2008
        March 2008
        February 2008
        January 2008
        December 2007
        November 2007
        October 2007
        September 2007
        August 2007
        July 2007
        June 2007
        May 2007
        April 2007
        March 2007
        February 2007
        January 2007
        December 2006
        November 2006
        October 2006
        September 2006
        August 2006
        July 2006
        June 2006
        May 2006
        April 2006
        March 2006
        February 2006
        January 2006
        December 2005
        April 2005
        March 2005
        February 2005
        January 2005
        December 2004
        November 2004
        October 2004

        Blog*Spot Archives
        November 2005
        October 2005
        September 2005
        August 2005
        July 2005
        June 2005
        May 2005

        Syndication

        RSS Feed 2.0
        Comments RSS 2.0
        WordPress

        Loading


        * One week in Chicago with Matter, MedCity News a.....
        * Medicaid facing cuts amid state budget shortfall..
        * As he seeks Wilson's runoff endorsement, Mayor .....
        * Senate president: Democrats not stalling on bud.....
        * Government consolidation may face resistance, c.....
        * Eagle Creek gets some attention..
        * ISS forms budget task force against Rauner prop.....


        * Illinois man gets 12 years for selling heroin
        * 1 killed in blaze at Rolling Meadows apartment building
        * Sleet, snow pummel Evansville area
        * Court monitor says IDOT should clean house on hiring rules
        * Bankrupt Caesars unit gets court's OK to use cash, for now
        * Family of man killed by Chicago police sues the city
        * Chicago mayor says state budget is 'wrong approach'
        * Judge grants delay of medical marijuana permit in Kankakee
        * Girl, 15, gets juvenile prison until 21 in sibling's death
        * Illinois medical marijuana patients now number 1,600

        * Court monitor says IDOT should clean house on hiring rules
        * Senate President Cullerton: We're not stalling
        * Judge grants delay of medical marijuana permit in Kankakee
        * State's medical marijuana patients now number 1,600
        * Illinois hires firm to evaluate shuttered Eagle Creek Resort
        * Committee approves plan to plug some budget holes
        * Local men plead guilty to stealing millions from Illinois EPA
        * State superintendent warns of 'perfect storm' for school districts
        * Committee to consider plan for plugging budget holes
        * New state lawmaker Butler officially sworn in

        * Doo wop, dining for a cause, Lyric's 'The Passenger'
        * AbbVie buying cancer drug maker Pharmacyclics for $21 billion
        * IDOT should clean house on hiring rules, court monitor says
        * Wisconsin committee passes Walker-backed bill targeting labor
        * Could Fido and Fluffy be your Amtrak seatmates?


          * Police warn of armed robberies in Bronzeville
          * 1 dead in 3-alarm blaze in Rolling Meadows
          * Notre Dame's Hesburgh remembered for his acts of kindness
          * Mom of slain Urban Prep student: 'Can you please put a sheet over him?'
          * Lake Superior ice caves to reopen after temporary closure
          * Emanuel tries to score points with Rauner attack
          * Two picked to build Chicago-area car-charging stations charged with fraud
          * Naperville bar stabbing victim can't recall details on witness stand
          * Wisconsin woman accused of Facebook chatting before crash that killed 3 children
          * Cook County judge halts medical marijuana license


          * Bedrock 66 Live! Features Celtic And Psychedelic Rock
          * "Don't Get Used To This" Breezy Budget Hearing
          * Lawmaker Suggests Eliminating Tuition Waivers For University Employees' Children
          * Profitable Exelon Seeks Legislation To Save Unprofitable Nuclear Plants
          * Let's Talk Kids - "A Future President"
          * Sexting Laws Could Be Added to School Handbooks
          * McDonalds to phase out chicken raised with certain antibiotics
          * Illinois Hires Firm To Evaluate Shuttered Eagle Creek Resort
          * Combat Vets Recreate Lincoln's Hearse
          * 2015 Budget - CapitolView


          * Bernard Schoenburg: Butler will listen to many before taking tough votes
          * Rep. Mark Batinick: Illinois can find savings in workers' comp reforms
          * George Will: Stopping the IRS
          * Eugene Robinson: Boehner's sorry spectacle
          * Court monitor says IDOT should clean house on hiring rules
          * Senate President Cullerton: We're not stalling
          * Judge grants delay of medical marijuana permit in Kankakee
          * State's medical marijuana patients now number 1,600
          * Illinois hires firm to evaluate shuttered Eagle Creek Resort
          * Our Opinion: Conquering stress, burnout important for all


          * Another cold one, then things warm up, finally
          * Mueller Park pavilion to be named for Horace G. Livingston Jr.
          * Old King's Orchard cheer team tackles more than the competition
          * Snow friends
          * Drunken-driving downward trend one worth keeping
          * Winchester musical set to take flight with ‘Peter Pan Jr.’
          * A temporary art form
          * Beautification project celebrates town’s birthday
          * Police Beat
          * Education, entertainment hand in hand


          * WHO to test Ebola vaccine in Guinea, might stop outbreaks
          * Rockford Boys and Girls Club help 'Flags for Vets' Graves'
          * Cyprus group claims responsibility for 2 referee bombings
          * Last Ebola patient to be released in Liberia
          * China stocks fall on growth target cut, Europe up before ECB

          * Dem. lawmaker explains why he skipped Neta...
          * 'Black Site' Reports Unconfirmed, Should B...
          * Dem on DHS fight: 'Jon Stewart can't write...
          * Immigration Executive Action Update: Presi...
          * Why I Won't Be At Israeli PM's Speech - Hu...
          * Immigrants hear how Obama policy might gai...
          * Immigrants hear how Obama policy might ben...
          * FIBRA Prologis Asistirá a la Conferencia d...
          * Rep. Gutierrez Proud Chicago Doesn't Coope...
          * 'Sensible Majority' That Approved DHS Fund...

          * George Will: Stopping the IRS...
          * Bill to Strengthen Patent System from Hiro......
          * Stopping the IRS...
          * Congressional Dems want to 'shift the focu......
          * Will: Stopping the IRS...

          * Cheap oil won't sway Iran's stance on a nu......
          * Cheap oil won't change Iran's stance on a ......
          * Day of partisan tensions as Netanyahu speaks...

          * How did Illinois' congressional delegation vote on last week's DHS measure?
          * Peters blasts Democrat response to Netanyahu speech
          * Why I think Judy would be “crying” at political partisanship done in her name
          * Juan Salgado, Executive Director Of Instituto del Progreso Latino
          * DOJ: No Charges Filed Against Darren Wilson; Ferguson Police Blatantly Racist
          * Municipal employees pack the hall for Chuy on the northwest side.
          * Meegan Files Lawsuit For Recount In Chicago's 33rd Ward Race
          * McDonald's To Curb Use Of Antibiotics In Chicken Food Supply
          * U.S. Supreme Hears Oral Arguments In Obamacare Subsidies Case
          * U.S. Supreme Court Hears Oral Arguments In Obamacare Subsidies Case


          * IEMA Urges People to Prepare for Severe Weather - Tornadoes, floods and severe storms can happen any time of year
          * IDHS helps more than 5,000 individuals with disabilities find jobs - Program offers necessary tools to earn a living wage and become more independent
          * 24th Anniversary Desert Storm Remembrance Ceremony
          * Illinois Department of Human Rights Announces 2015 Spring Training Schedule
          * Snow and Freezing Rain to Impact Travel in Illinois - IDOT Crews Prepared to Battle Winter Weather this Weekend




              Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller