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Freezing the fund

Friday, Dec 19, 2008 - Posted by Rich Miller

* From the New York Times we have a more detailed report about the federal government’s attempt to freeze the governor’s campaign fund…

Gov. Rod R. Blagojevich of Illinois plans to ask that he be permitted to use campaign funds to defend himself against federal corruption charges, a lawyer who represents the head of the embattled governor’s campaign fund said Thursday.

Michael D. Ettinger, the lawyer for Mr. Blagojevich’s brother, Robert, who is chairman of the campaign fund, The Friends of Blagojevich, said that the governor would make the request to the judge assigned to his case when and if he is formally indicted.

“There’s a real question about how he will be able to pay for his defense,” Mr. Ettinger said. […]

Mr. Blagojevich may also be blocked from using campaign funds to pay for his defense. Mr. Ettinger said the fund has received a letter from the office of United States Attorney Patrick J. Fitzgerald warning that federal prosecutors would seek the forfeiture of the campaign contributions, and advising that the fund should not spend, dissipate, or conceal any of its resources. There was $3.6 million in the fund as of June 30, according to public filings.

* More from the Sun-Times

Meanwhile, defense lawyer Michael Ettinger, who represents Robert Blagojevich, said there is an expectation that the governor’s campaign fund will be indicted.

“There’s precedent from [former Gov. George] Ryan,” Ettinger said. “I assume they’ll do that here too.”

If that happens, Ettinger said they’ll seek a hearing to have attorney fees set aside from the campaign.

Earlier this week, prosecutors notified the fund that they would seek to freeze it.

“Don’t spend it or conceal it or dissipate it, we’ll seek reimbursement if you do,” Ettinger said the letter stated.

* This bit of background shows that there is a precedent for using a frozen campaign fund to pay legal expenses, however…

Gov. Blagojevich’s last campaign finance report shows Friends of Blagojevich had $3.6 million in the bank as of June 30. The 76-page affidavit that accompanies the criminal complaint filed against Blagojevich cites a cooperating witness as saying his campaign was seeking to raise $2.5 million by the end of the year, when a tougher campaign fundraising law takes effect. […]

Putting attorneys and Blagojevich on notice that the campaign money could be forfeited if he were convicted could effectively freeze the fund — something the government did as it built its case against former Gov. George Ryan.

The Citizens for Ryan campaign fund eventually was charged and convicted of racketeering, although U.S. District Judge Rebecca R. Pallmeyer allowed the fund’s defense attorney to tap it for his fee.

* They want to use the campaign money because, as I told you yesterday, Attorney General Lisa Madigan has turned thumbs down on taxpayer financing

Taxpayers will not have to foot the bill to defend Gov. Rod Blagojevich against criminal charges or moves to oust him from office, Illinois Attorney General Lisa Madigan said Thursday.

“It is absurd to suggest that taxpayers must finance the defense of a criminal action against Governor Blagojevich who is accused of corruptly betraying the public trust for personal and financial gain,” Madigan said in a letter to defense attorney Ed Genson.

Genson submitted a letter to Madigan Wednesday specifically outlining the cases against the governor and requesting the state pay for his defense in those cases.

Genson later claimed he didn’t expect taxpayers to fund his criminal defense, only his defense against ongoing impeachment proceedings.


* Related…

* Gov. Blagojevich on his own for legal bills

* AG rejects Blago request for representation

* Rod Blagojevich thwarted in attempt to have state pay legal costs


  1. - How Ironic - Friday, Dec 19, 08 @ 9:46 am:

    I think that this is an excellent move by the feds. If the money is ill-gotten, it shouldn’t be allowed to help keep him out of jail.

    I’m glad the AG has dis-allowed payment by the state for defense.

    Jim Leach of WMAY did have an interesting point however, about the impeachment. As it is a State Action, against a state official, it perhaps wouldn’t be out of line for the state to pay for that defense.

    But not the criminal case. That should be all on the Gov.

  2. - DuPage Dave - Friday, Dec 19, 08 @ 9:51 am:

    This raises the question as to why an elected official’s campaign fund would ever be allowed to pay for his criminal defense. Such use would make the campaign fund essentially a personal fund, which I don’t believe is the intent of a campaign fund. Other than paying for staff salaries, office rent, TV commercials, and printed materials, what else should campaign funds ever be used for?

    Also- why should officials with no election opponents (e.g., Mike Madigan) be allowed to accumulate millions in “campaign” funds, then dole them out to others who do face a challenge at the polls?

  3. - Ghost - Friday, Dec 19, 08 @ 10:00 am:

    It would be interesting to see soem civil suits, perhaps even a class acion, brough against the fund to return money to 1, donors who contributed under pressure to do so in order to get or keep contracts; and/or 2, donors who were misled.

  4. - wordslinger - Friday, Dec 19, 08 @ 10:03 am:

    I’ll bet anything that when Congress passed the RICO Act in 1970, they never dreamed it would one day be used to go after campaign funds — or that lawmakers would be prosecuted under criminal statutes designed to go after the Mafia.

  5. - VanillaMan - Friday, Dec 19, 08 @ 10:13 am:

    Blagojevich made his illegal thinking public when Fitzgerald allowed the audio tapes to include Blagojevich’s suggestion of moving campaign funds to “prepay” a lawyer. That is simple money laundering, and anyone would know that this method is illegal.

    So the freeze is good to go.

  6. - VanillaMan - Friday, Dec 19, 08 @ 10:16 am:

    When the RICO Act was passed by legislators, many of them had experiences enough to craft the legislation correctly. They had mob ties and used RICO to innoculate themselves against both the mob and against any future illegalities they had conducted previously. These legislators weren’t virgins.

  7. - wordslinger - Friday, Dec 19, 08 @ 10:24 am:

    VMman, I’m not sure what you’re trying to say. I doubt if they thought it would ever be used against campaign funds. In fact, it took 10 years after passage for RICO to be used at all.

  8. - You Go Boy - Friday, Dec 19, 08 @ 10:27 am:

    “Friends of Blagojevich” - wow, the name itself is hilarious. It will soon be “Friend of Blagojevich”, and it will consist of a mirror.

  9. - zatoichi - Friday, Dec 19, 08 @ 10:50 am:

    If I gave money to a politician’s campaign fund, I would expect that the money would be spent on the costs of getting the person I liked into office. The concept of using that money after the election to cover personal legal costs or to be given to other’s campaigns strikes me as a disingenuous change of why the money was requested and given. If the bucks are not specifically campaign related then use them as desired. It just strikes me as odd that the campaign group “Friends of Blagojevich” wanted more dollars to cover legal expenses that have nothing to do with campaigning. But hey, ya want to give away your bucks, be my guest.

  10. - Attorney Fees - Friday, Dec 19, 08 @ 10:57 am:

    Note, in the Ryan case it was the attorney defending the campaign itself (Tom Breen) that was allowed by the Judge to get reimbursed for his fees in fighting the charges and the forfeiture against the Campaign. The freeze on the account in that case did not allow for Ryan to use the funds for his own defense attorneys.

  11. - Ghost - Friday, Dec 19, 08 @ 1:11 pm:

    VM, prepaying atorneys is perfectly legal, these funds are often refrred to as retainers.

  12. - Rich Miller - Friday, Dec 19, 08 @ 1:13 pm:

    Ghost is right.

  13. - no plan B - Friday, Dec 19, 08 @ 5:04 pm:

    Regarding prepaying attorneys - I believe Blago’s plan to prepay was to intentionally hand over much more money than needed with the understanding to get a “refund” later. I’m pretty sure that’s not the legitimate purpose of a retainer.

  14. - BLOGOPSTER - Saturday, Dec 20, 08 @ 2:47 pm:

    Governor Rod Blago signed the paperwork to Fire ALPLM Director, Rick Beard after being accused of shoplifting. Losing a 200K a year job. In this case the Governor felt that waiting for the right of due process was not necessary. Mr. Beard has only been charged with a crime at this time. Now he asks the people of Illinois to be patient until he can prove he has done nothing illegal in a court of law. Who will pay Mr. Beards defense team.
    Fool me once, shame on you.
    Fool me twice, Shame on me.
    Fool me three times……

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