From the US Attorney…
CHRISTOPHER KELLY INDICTED ON FEDERAL TAX FRAUD CHARGES;
ALLEGEDLY CONCEALED MORE THAN $1 MILLION IN INCOME AND
USE OF BUSINESS FUNDS TO PAY PERSONAL GAMBLING DEBTS
*** DOWNLOAD THE FULL KELLY INDICTMENT HERE ***
*** HURTGEN RE-INDICTMENT IS HERE ***
*** REZKO SUPERSEDING CHARGES ARE HERE ***
* More…
A suburban businessman was indicted today on federal tax fraud charges for allegedly understating his true personal and business income by more than $1.3 million over five years, in part by concealing the use of corporate funds for personal expenses including gambling debts to sports bookmakers. The defendant, Christopher G. Kelly, president and owner of a roofing business and a separate consulting firm, allegedly cheated the government on his personal and business taxes between 2000 and 2005, according to a 12-count indictment returned today by a federal grand jury, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Alvin Patton, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
Kelly, 49, of Burr Ridge, was charged with one count of obstructing and impeding the IRS, five counts of filing false individual federal income tax returns, five counts of filing false corporate tax returns and one count of illegally structuring monetary transactions. He will be arraigned at a later date in U.S. District Court.
According to the indictment, Kelly was the president and owner of BCI Commercial Roofing, Inc., and CGK Consulting, Inc., both of which shared offices at 3062 West 167th St., Markham. Kelly maintained financial control over the two companies and determined how each company spent money and categorized its spending for purposes of calculating its business expenses as well as Kelly’s personal income.
As part of a corrupt endeavor to obstruct and impede the IRS, Kelly allegedly used business funds to pay for certain personal expenses, concealed the true nature of the payments through improper recording of the payments on the companies’ financial books and created false documents describing the payments; structured cash withdrawals under $10,000 from banks by disguising them as legitimate business expenses; and used third parties to pay portions of his illegal gambling debts.
More specifically, Kelly allegedly:
o caused BCI Roofing to pay gambling debts for certain of his losing wagers placed with Individual A, who, with the assistance of Individual B, ran a bookmaking operation in Illinois that accepted wagers on such sporting events as professional and college football, professional and college basketball, baseball and horse racing, and with whom Kelly placed millions of dollars of wagers. On at least one occasion, Kelly allegedly hid the use of corporate funds to pay a gambling debt to Individual A by ordering that the payment be falsely recorded in BCI Roofing’s financial books as a loan from the company to Individual A;
o placed millions of dollars of wagers with casinos in Las Vegas and caused BCI Roofing to pay for certain of his losing wagers there. On at least one occasion, Kelly allegedly hid the use of corporate funds to pay a gambling debt to a casino by ordering the preparation of false internal BCI Roofing documentation to make it appear that the payment was a legitimate business expense incurred by the company as part of a roofing contract for an airline;
o caused BCI Roofing to partially pay for his home in Burr Ridge and caused BCI Roofing and CGK Consulting to pay for various home items and services, including electronic equipment, hardwood floors, drapery, and lawn maintenance; and
o hid the use of corporate funds on multiple occasions to pay for various items and services for his home by ordering the preparation of false internal BCI Roofing documentation to make it appear that his payments for home items and services were legitimate business expenses incurred by the company as part of various roofing contracts for such clients as airlines and an electric company.
Both the IRS obstruction count and five counts of filing false individual federal tax returns for calendar years 2001 through 2005 allege that Kelly reported an aggregate of more than $5.2 million in total income for those five years but understated his true income by more than a $1 million for the same period.
As a result of concealing his income and directing the fraudulent classification of certain personal expenses as business expenses, the IRS obstruction count also alleges that Kelly caused false corporate income tax returns to be filed on behalf of BCI Roofing and CGK Consulting from 2000 to 2005, understating the companies’ true income by more than $300,000. The five counts of filing false corporate tax returns on behalf of BCI Roofing for each fiscal year from 2000-01 through 2004-05 allege Kelly overstated the company’s cost of goods sold and understated both its taxable income and total tax by falsely deducting certain personal expenses as business expenses.
The IRS obstruction and structuring counts allege in September 2004, Kelly solicited Individual C’s help in cashing three checks, each slightly under $10,000, and returning the cash to Kelly. In one instance, Kelly allegedly gave Individual C a BCI Roofing check for $9,500 payable to Individual C’s four-year-old child, and the following day, Kelly allegedly gave Individual C BCI Roofing and CGK Consulting checks payable to Individual C and Individual C’s spouse and obtained the cash back from Individual C for all three checks.
About the same time, Kelly also allegedly concealed his receipt of additional cash by depositing and cashing six BCI Roofing checks payable to himself, his children, his wife and cash. In each of these transactions, Kelly allegedly structured the cash receipts in amounts less than $10,000 to avoid generating Currency Transaction Reports.
The indictment seeks forfeiture of $86,600, which is the total amount of the allegedly structured funds.
The IRS obstruction count also alleges that in early 2005 Kelly attempted to conceal the source and nature of a partial payment on a large gambling debt he owed to Individual A. To assist Kelly in paying the debt, Individual D arranged for a wire transfer of approximately $79,140 from a bank account in Saudi Arabia to a bank account in Florida, according to the indictment. After learning that the wire transfer was not credited to the Florida bank account, Kelly allegedly arranged for the wire transfer of approximately $45,000 from a pizza company in Chicago to Individual A’s bank account. On at least one other occasion, Kelly allegedly attempted to pay a portion of the gambling debt to Individual A by tendering multiple checks, each made out for thousands of dollars and with the payee line left blank, from a second pizza company.
* Hurtgen…
A former executive in the Chicago office of Bear Stearns & Co., an investment firm that arranges financing for public works projects in Illinois, was indicted today on federal charges for allegedly assisting a fraud scheme in which a former member of the Illinois Health Facilities Planning Board and a construction firm owner engaged in insider-dealing, influence-peddling and extortion involving their private interests and public duties, federal officials announced today. The defendant, P. Nicholas Hurtgen, a lawyer and investment banker, allegedly participated in a fraud scheme to help lawyer, businessman and previous co-defendant Stuart Levine, formerly an influential member of the state board that controls medical facility construction projects, obtain millions of dollars for Levine and certain of his associates, including another previous co-defendant, Jacob Kiferbaum, an architect and construction firm owner, who schemed with Levine to obtain multi-million dollar contracts and to distribute construction kickbacks, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois.
* From Hurtgen’s reindictment…
HURTGEN told the CEO that Levine and Kiferbaum were friends and that Levine had a close relationship with a high-ranking Illinois elected official, Public Official A, who also liked Kiferbaum. HURTGEN told the CEO that she did not want to know why Levine and Public Official A wanted Kiferbaum to get the Edward Hospital construction projects, but advised her that the support for Kiferbaum by Public Official A and those surrounding Public Official A was “all about money” for political campaigns. HURTGEN also told the CEO that he had recommended to Levine that Kiferbaum “latch on to” the CEO’s team because Edward Hospital was a growth hospital.
* More on Hurtgen from the Tribune…
Hurtgen was reindicted on charges he took part in a fraud scheme to force kickbacks from hospital expansion projects. He was originally charged with political insider Stuart Levine, real estate consultant John Glennon and construction firm owner Jacob Kiferbaum. But a judge in March dropped Hurtgen from that case, finding that the original indictment did not specifically outline that Hurtgen knew that kickbacks were involved.
*** Statement from Gov. Rod Blagojevich ***
“Chris Kelly is my friend. I am saddened to hear these allegations about Chris’s personal life. I know the pain it must be causing him and his family. My thoughts and my prayers are with them during this difficult time. In fairness to Chris, I believe it is important to let the legal process play out and not rush to judgment.”
*** Kelly is looking at 38 years behind bars ***
Kelly, 49, of Burr Ridge, was charged with one count of obstructing and impeding the IRS, five counts of filing false individual federal income tax returns, five counts of filing false corporate tax returns and one count of illegally structuring monetary transactions. He will be arraigned at a later date in U.S. District Court. […]
If convicted, each count in the indictment carries the following maximum penalties: obstructing and impeding the IRS and filing a false tax return – three years in prison and a $250,000 fine, and illegal structuring of monetary transactions – five years in prison and a $250,000 fine.
*** 5:02 pm *** A good point from the Sun-Times…
The governor’s campaign has received $212,000 in contributions from Kelly’s roofing and consulting companies, and it remains unclear if the governor will return the money.
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*** 12:01 pm *** The Tribune reports on some unsettling news…
Mass transit in the Chicago area would screech to a halt from Sunday night through Monday if all goes according to plan in a one-day “job action” that CTA labor unions have approved, union officials said today.
The threatened walk-off, which union leaders insist is not a strike, aims to send the strongest message yet the governor and lawmakers in Springfield that the deadlock over transit funding must end now, according to the Amalgamated Transit Union, which represents CTA bus drivers, train operators and other employees.
If successful, the shutdown of all CTA bus and rail service for 24 hours would paralyze downtown Chicago and overwhelm transportation across the region. The CTA serves 40 suburbs.
The union’s ultimate goal is to shut down all CTA, Metra and Pace operations to demonstrate the need for more transit funding and to restore balance to union pension funds and health care plans. But such a wide-spread walkout would require the cooperation of 19 unions at the three transit properties in the Regional Transportation Authority system.
* Don’t forget to purchase tickets here for the December 16th performance of “No-El, Or How the Blagojegrinch Stole Christmas” - Our Capitol Fax holiday party. I do have some extra tickets if you need them.
* 12:29 pm - Rod Blagojevich… Hero?
…and I dare say that my life was saved by our own Governor Rod Blagojevich when he stopped me from accidentally taking a backward step off the roof of the Marion Civic Center.
[H/T: 11th Hour]
* 1:01 pm - Congrats to Rep. Eddie Sullivan on the birth of his new daughter, Kaleigh. I’m told that mom and daughter are both doing well.
* 1:13 pm - From a Chris Lauzen press release entitled: “Lauzen Celebrates Hastert Endorsement of Oberweis”…
The Hastert endorsement may be good for Oberweis (who has lost all 3 campaigns he’s ever run, including the 2002 U.S. Senate Race, also with Hastert’s endorsement), but it’s bad for the people and bad for unity in the Republican Party. Hastert has resigned; Oberweis is running against me; let the people decide.
*** 1:32 pm *** And then there were two. Republican congressional candidate Kevin Burns has dropped out of the race…
Soon after former House speaker Dennis Hastert endorsed one of his opponents this morning, candidate Kevin Burns announced he is dropping out of the 14th Congressional District race.
Burns, Geneva’s mayor, said Hastert’s support of Jim Oberweis was the main factor in his decision to “suspend” his campaign.
“It is my best interest and the party’s best interest to suspend my campaign,” Burns said. “It’s extremely difficult, but in the final analysis, it’s what’s best for me.”
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Hmmm…
Thursday, Dec 13, 2007 - Posted by Rich Miller
There are plenty of rumors about what this press conference will entail, but we’ll just have to wait and see…
Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, together with officials of several federal law enforcement agencies, will hold a press conference at 2 p.m. today, Thursday December 13, 2007, to announce a new criminal matter.
The press conference will be held in the U.S. Attorney’s Press Conference Room on the 11th floor, north end, of the Dirksen Federal Courthouse, 219 South Dearborn St., Chicago. Media access to the press conference room will begin at 1 p.m. Additional details will become available sometime within the hour preceding the press conference. There are no court appearances scheduled today in connection with this matter.
I’ll update this when information becomes available. And I’ll open comments if it’s appropriate. This is just a heads up for now.
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Yep, we finally have a name for these awards. I called around yesterday to see if we can have trophies made up in the shape of a horseshoe - the actual shoe, not the dish.
I’m gonna declare a tie in the legislator who best epitomizes public service award. Ray LaHood wins the “statesman” award. CUB gets the association award.
Three new questions today. Please explain all your responses…
1) Best political bar/restaurant in Springfield (must be currently operational)
2) Best statewide officeholder
3) Best state legislative staffer
Again, please explain your votes and try your very best to answer all three questions. Thanks.
…Adding… The contest is not just based on the number of votes, but on the intensity of each vote. So, if you don’t explain your vote, it will have far less weight or not be counted at all, depending on my mood.
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Reform and renewal, Parts 9,682, 9,683, 9,684, 9,685 and 9,686
Thursday, Dec 13, 2007 - Posted by Rich Miller
* As you know already, former Gov. Jim Thompson wrote a letter to the Tribune the other day attacking the paper for writing about Patti Blagojevich’s real estate business. Mrs. Blagojevich has, in the past, had clients who also were closely connected to state politics and government.
But Big Jim and his wife had a different standard when he was governor. Dan Curry dug up this 1987 Thompson quote…
[Jayne Thompson] no longer practices law because “I`m somewhat of a liability to some law firms. It precludes them from getting the kinds of state business they think they are entitled to and probably are.“
Sensitive to conflict-of-interest charges, she tries to avoid any hint of impropriety as wife of the highest official in the state.
* Meanwhile, the self-promotion at taxpayer expense continues…
llinois taxpayers could be on the hook for as much as $335,000 in the coming year to make sure Illinois politicians are photographed and videotaped at various state events.
According to state documents, the state has renewed the contracts of five video production companies in the northern part of the state to do the special public relations work.
The figure could rise even higher when the ink dries on contracts for private companies in other parts of the state.
Gov. Rod Blagojevich came under fire for the contracts last year when his gubernatorial opponent, Republican Judy Baar Topinka, called them an example of the governor using taxpayer money to promote his political agenda.
* The governor courts the Gucci loafer crowd…
[A] quintet of clout-heavy players hoped to cash in on that generosity Wednesday with a small fund-raising gathering for Gov. Blagojevich at the Chicago Yacht Club.
“I am honored to be hosting this event along with my friends David Gustman, Michael Henneman, Michael Rumman and Roger Bickel,” attorney Brian Hynes wrote in the invitation.
The hosts: Hynes, a Springfield lobbyist; Gustman, an attorney and next-door neighbor of Tony Rezko, the governor’s indicted former adviser; Rumman, a Rezko business associate and former member of the governor’s Cabinet; Bickel, an attorney and former staff member of imprisoned ex-Gov. George Ryan’s, and Henneman, who owns a Downstate engineering company that has gotten a slew of government contracts.
* More fun stuff…
Illinois law prohibits tax deadbeats from getting state business, but that hasn’t kept an associate of indicted gubernatorial adviser Tony Rezko from operating restaurants on state property.
Al Chaib owes the state $359,639 in unpaid business taxes dating back five years, yet his firm, Morpheus LLC, owns Subway sandwich shops at all seven Illinois Tollway oases, the Chicago Sun-Times reported in Thursday’s editions.
“We have asked the tollway and lawyers from the attorney general’s office to look into the ownership issue and make sure there is no conflict with state procurement rules,'’ said Abby Ottenhoff, spokeswoman for Gov. Rod Blagojevich.
* And the feds take over yet another case…
Federal prosecutors have taken over a state investigation into allegations of influence peddling involving a fundraiser for Gov. Rod Blagojevich.
In 2005, Illinois State Police closed a case against Harish M. Bhatt, a Joliet pharmacist and major fundraiser for the governor, who had been accused of offering to help derail a fraud investigation into a Chicago pharmacist in exchange for a $25,000 campaign contribution to Blagojevich. Jatin Patel, who stopped payment on a $25,000 check he had given to the governor’s campaign shortly after writing it, has denied any wrongdoing.
The state has ordered Patel to repay $1.5 million in alleged Medicaid overbillings. Bhatt, who was also subject of a fraud investigation, has not had sanctions imposed by the state and says he did nothing wrong. Patel has told the Chicago Tribune that Bhatt had offered to help in Patel’s fraud probe in exchange for a campaign contribution, an assertion Bhatt denies. […]
Now, the U.S. attorney’s office in Chicago is subpoenaing state police files and taking over the investigation, The State Journal-Register has learned.
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Are you freaking kidding me? *** Updated x2 ***
Thursday, Dec 13, 2007 - Posted by Rich Miller
* As you might imagine, this offends me to no end…
A possible deal right out of left field could leave taxpayers on the hook for the renovation of Wrigley Field.
It’s not a done deal, but CBS 2 has learned discussions have been on for weeks for the state to purchase Wrigley Field. As Chief Correspondent Jay Levine reports, the stadium is a Chicago landmark and sits on a valuable piece of property in a hot neighborhood.
But the Cubs might be worth more to a new owner without Wrigley Field, than with it. And that’s why the state is talking with the Cubs about buying the stadium and running it just like they do U.S. Cellular Field.
Sources confirm Wednesday night that the Gov. Rod Blagojevich’s people have been talking with the Cubs’ owners about buying the stadium before the Tribune Co. sells the team.
So, the state is bidding on Wrigley to help Sam Zell get a better price for the Cubs? That is so offensive to me.
* More from the Tribune…
The bidding for the Cubs has been red hot, giving Tribune several choices on how best to sell the team and the assets connected to it, including the ballpark. […]
Selling the ballpark separately to an entity like ISFA actually could help Tribune secure a better price overall, sources said. If a new owner were to pay top dollar for both the team and ballpark, the price tag for major renovations likely would suppress the overall bidding price, those sources say.
Why should the state help a kazillionaire maximize his profits from an asset sale? This is crony capitalism at its worst.
The Cubbies are worth a fortune because of Wrigley, not in spite of it. Those tourists don’t flock to Wrigely to see the Cubs play. They come for the “atmosphere.” No new owner in his or her right mind would move out of that stadium, no matter how dilapidated and run-down it is.
The governor is the state’s number one Cub fan, and it really shows in this goofy move. Instead of working on solving the CTA funding crisis, and carving out a deal on a much-needed capital plan, he’s showboating on this stupid idea.
*** UPDATE 1 *** This report from NBC5 is so not true…
The plan, in part, intends to prevent the Cubs from leaving the city for a new stadium in the suburbs.
That’s a completely bogus cover story, to say the least. No potential owner could possibly be stupid enough to move the Cubs from its “holy” site out to the suburbs. And if he/she did, that person deserves to fail.
*** UPDATE 2 *** Mayor Daley turns big thumbs down on goofy idea…
“We can’t even get any money for the CTA and they’re worried about the Chicago Cubs? They’ve made money every year. It’s very profitable and some way, we’re supposed to bail them out? I’ve never heard [of that] . . . I don’t think they’re leaving. They just increased the price of tickets,” Daley said.
“We have a crisis at the CTA right now. It’s hard to believe . . . that people are now talking about taxpayers helping out the Cubs. The Cubs are not gonna move. It’s a gold mine. . . . If you’re gonna start holding this issue over the heads of passengers of the CTA and this crisis we’re in and they want to start talking about whether or not taxpayers are gonna buy [Wrigley Field] — that’s hard to believe.” […]
…Daley said he raised “serious questions” during that meeting. In fact, he told Zell point-blank, “You’re basically asking the taxpayers to . . . some way help the Cubs. Simple as that.”
The mayor said he’s so opposed to the taxpayer-financed acquisition of a private sports stadium, he would oppose any effort to raise the restaurant tax or hotel tax to retire Wrigley stadium bonds.
“You’re not gonna increase the hotel tax in the city of Chicago for that purpose. You will not increase the restaurant tax. . . . It would be unfair for everyone,” Daley said.
Can you say “Dead”?
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Morning shorts
Thursday, Dec 13, 2007 - Posted by Paul Richardson
* Morgan Stanley issues full U.S. recession alert
* Countrywide Financial under IL probe, NY Times reports; more here
* Sun-Times media shareholder demands cost cuts
* Ditka defends charity but dissolves it
* Sun-Times Editorial: Ditka should have kept better on eye on charity
Ditka should have raised questions at the large disparity between the money his fund spent on three celebrity golf tournaments, costing $715,000, according to USA Today, and the charity his fund gave to ex-players.
“Not enough, probably, was given out,” admits Ditka, stating that $159,000 was the actual amount of the payouts, including a sizable sum to Misericordia, the local facility for children with developmental disabilities. One reason his fund didn’t give more money to ex-players, said a person involved in the trust who requested anonymity, was the unexpected difficulty of getting proud or mentally ill ex-players to apply for aid.
* Davlin says Springfield property tax may go up
Davlin blames the legislature, which has boosted — while not providing the money — firefighter pension and death benefits four times since 1999.
The council has no control over the pension benefits given to cops and firefighters, but local governments must provide the annual payment from property tax revenue. Actuaries determine the city’s pension payments, estimating what rate of return the systems will get on their investments.
* CHA proposing adult residents work 20 hours or face eviction
* Clout City: Right to work
City and negotiators for 33 trade unions representing 7,800 city employees recently hashed out a deal on pay and benefits for the next 10 years. Some critics have charged that the Daley administration gave away too much–pay will increase by 16 percent over the next five years alone–in the interest of ensuring labor peace during the possible buildup to the 2016 Olympics. Others, including many of the council’s black aldermen, have long howled that the trades shouldn’t get sweet city deals when they can’t be bothered to improve recruitment outside old white ethnic circles. Former alderman and current Cook County commissioner William Beavers summed up this view during last year’s Big Box minimum-wage debate: Unions, he said, “don’t do nothing for us in the construction industry.”
* Cook officials told to brace for cuts
* Stroger’s sales tax increase plan dies
* Tribune Editorial: The power of taxpayers
* Durbin seeks probe of air controller fatigue and runway safety at O’Hare; more here
* FutureGen developers plan site announcement on Tuesday, despite DOE ’slow down’ advice; more here
“What’s going on at DOE behind the curtain, I’m not sure,” Sheehan said.
“We do intend to move forward on December 18th as planned,” she said, adding the developers believe the DOE has plenty of time to finalize its record of decision. “We do feel collectively that we owe this (announcement) to the states of Texas and Illinois.”
The site announcement, initially due in September, has been delayed several times.
FutureGen’s developers say the coal-fired plant would emit almost no carbon dioxide, trapping the greenhouse gas and storing it underground. The plant is intended to be a prototype, experimenting with the technology so it can be used in future power plants.
* Two states, one big coal windfall
* IL school chiefs’ pay on sharp curve up
School superintendents’ average pay in Illinois climbed 23 percent in the last five years, a jump experts said reflects an increasingly competitive market and a number of retirees with big end-of-career raises.
* JCAR to vote later on smoking ban
“The law supercedes the rules,” Kimberly Parker, a state Department of Public Health spokeswoman, said Wednesday. “The law goes into effect as announced.”
* Russ Stewart: Madigan’s Misery, to quit or fight in 2010?
A new scenario is germinating: Lisa Madigan could run for the Illinois Supreme Court in 2010, when the terms of 1st District (Cook County) Justices Charles Freeman and Thomas Fitzgerald expire; if one or both retire, she would easily win a Democratic primary. And, if a Democrat occupies the White House, Lisa Madigan would be on a short list of potential U.S. Supreme Court appointees. In Illinois, Mike Madigan would back state Treasurer Alexi Giannoulias in the primary against Blagojevich, and state Comptroller Dan Hynes would run for Lisa’s spot as attorney general.
* Oberweis to get Hastert endorsement; more here and here
* McQueary: Congressional candidate takes campaign to high school
* 18th CD candidates on tightening of immigration
* WurfWhile: SEIU endorsement gives Foster support, hurts Laesch
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