ALL IN HIS HEAD? Rightly so, much of the media’s attention today will be focused on the fact that US District Judge Amy St. Eve has declared what we all knew to be true, but had been steadfastly denied by Gov. Rod Blagojevich: “Public Official A” is our very own governor.

The governor deserves whatever criticism he gets from this. Like George Ryan before him, Blagojevich has steadfastly denied that he is the Public Official A mentioned in numerous indictments, proffers and plea bargains in the US Attorney’s ongoing investigation of corruption within his administration. And just like Ryan, he was not telling the truth that everybody knew anyway.

Public Official A is alleged to have done several things, including telling Democratic fundraiser Joe Cari that he could “award contracts, legal work and investment banking to help with fundraising.” One of the new claims revealed yesterday against indicted Blagojevich adviser/fundraiser Tony Rezko was that he essentially sold a slot on the Illinois Banking Board for $50,000 in contributions to the governor’s campaign account.

While the media always finds it tempting to take a federal prosecutor’s word as if it is coming from Heaven itself, prosecutors often stretch their cases and pad them with extraneous and headline-grabbing charges that just don’t add up in the end.

For instance, the allegation that has received most of the attention in this fiasco was the alleged attempt by Rezko and Stu Levine to allegedly extort a $1.5 million Blagojevich campaign contribution from Tom Rosenberg. The contribution would be given in exchange for lifting the brick off of Rosenberg’s attempt to win a $220 million investment management allocation from the Teachers Retirement System. Rosenberg threatened to go to the cops and Levine, who was a member of the TRS board, and Rezko allegedly dropped the scam.

Rezko is now attempting to discredit Levine on several fronts. His attorneys were given the green light last week by Judge St. Eve to bring up his alleged super-heavy drug use, which included a long list of substances that could have impaired his memory and his judgment and may cast serious doubt on his story.

That’s important because Rezko’s attorneys allege that the $1.5 million scheme was not a scheme at all. In fact, they say, Levine made the whole thing up. And since the feds don’t have much other than Levine’s word to go on in this charge, if the defense can sufficiently impeach Levine’s credibility, they may have a shot at winning this point. But a ruling yesterday won’t help their case.

According to Rezko’s lawyers, the president of an investment firm, David Evans, received a “term sheet” from Rosenberg’s company that indicated Rosenberg’s firm might be up for sale. Rezko claims that Evans brought the info to TRS executive director Jon Bauman, who held up the $220 million investment allocation to Rosenberg while he looked into the situation as a matter of routine. The feds say that Levine, himself, brought it to Bauman, knowing that Bauman would have to hold up the allocation. Bauman eventually talked to Rosenberg and was assured that there was no pending sale and then the entire board went ahead with the approval process.

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And this is where the defense gets interesting.

Rezko claims that Stu Levine cleverly concocted a story to Tom Rosenberg that Levine was the one actually holding up the TRS approval of his $220 million allocation in order to extort money from him.

According to Rezko’s lawyers, Levine and Rosenberg go way back. Rosenberg had allegedly reneged on a previous kickback arrangement with Levine in 2001, when Rosenberg was supposed to pay Levine $500,000 for arranging a $100 million TRS investment allocation. Rosenberg also allegedly owed the estate of Levine’s business mentor, Ted Tannenbaum, a bunch of money. Levine allegedly negotiated a settlement and asked for a kickback based on the discount, which Rosenberg allegedly refused to pay.

Then, in April of 2004, after Levine had been told by TRS director Bauman that the Rosenberg deal would go through, Levine and another as yet unidentified person met with Tom Rosenberg about the Tannenbaum estate settlement in Levine’s office. According to documents filed by Rezko’s lawyers, as Levine was leading Rosenberg into his office he told his secretary to hold all his calls except for Rezko’s. “Levine was not expecting Rezko to call but wanted to impress [Rosenberg] with his power and - falsely - lead [Rosenberg] to believe that the administration was backing the delay in approving [Rosenberg’s] allocation.”

Rosenberg then allegedly contacted Republican powerbroker Bill Cellini and asked him to check into what was going on with his TRS investment allocation. Cellini, in turn, contacted Levine, who told him that Allison Davis (Barack Obama’s former boss who had worked with Rosenberg on some movies) had approached Tony Rezko on behalf of Rosenberg and told Rezko that Rosenberg wanted to get involved with fundraising for Gov. Blagojevich. The feds claim that it was Rezko who told Levine about Davis’ conversation with Rosenberg, but Rezko claims Levine made up that conversation as well.

According to Davis’ statements to the feds that conversation between himself and Rezko never actually happened. But, when Cellini called Rosenberg to tell him what Levine had said, Rosenberg hit the roof and denied he had ever asked Davis to set up any such thing.

When Cellini called Levine back, Levine told Cellini that Rosenberg was lying, adding that Davis, Rezko and Blagojevich insider/fundraiser Chris Kelly had met to discuss raising money from pension fund managers. Davis has said that meeting never took place, either, but Cellini passed the word along to Rosenberg about the meeting and Rosenberg, who had already been allegedly shaken down by Levine twice before, freaked out and threatened to call the authorities.

The US Attorney’s proffer revealed that the government has a tape recording of Levine talking to his business partner Robert Weinstein about how he had told Rezko about the shakedown, but they apparently don’t have any recorded conversations with Rezko himself about this topic. The feds also have a detailed statement from Levine about a meeting he had with Rezko at the Standard Club which supposedly detailed the shakedown attempt. Rezko denies that any such thing was discussed.

But the feds are not calling Cellini to testify and they have yet to even interview him. They appear to be basing their entire charge solely on Levine’s word and that single taped phone call where Levine talks about Rezko sharing in the spoils.

As the defense claims: “While Levine apparently had delusions of future grandeur, no one can corroborate Levine’s claim that Rezko agreed to participate in Levine’s vision, and the weight of the evidence suggests that any of the future transactions would not have been consummated in the way Levine envisioned.”

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Rezko is obviously attempting to show that Levine acted alone in this matter, but yesterday Judge St. Eve ruled that a previously undisclosed allegation that Rezko allegedly shook down Joe Cacciatore for $50,000 in order to put Cacciatore’s brother Phil on the Illinois Banking Board was relevant to proving that Rezko had helped perpetrate the alleged scam on Tom Rosenberg. Cacciatore, a member of the Illinois State Board of Investment, was supposed to contribute $25,000 to Blagojevich while Rezko’s company Rezmar was supposed to contribute the other half.

Phil Cacciatore was appointed to the board, but a check of campaign finance records shows that those two contributions apparently never happened.

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So, to sum up, we have a known drug addict, Stu Levine, who is facing lots of time behind bars claiming that he and Tony Rezko concocted a scheme to squeeze a $1.5 million campaign contribution for Gov. Blagojevich, and the feds base their case on Levine’s word without any other real evidence to bolster that evidence. According to campaign finance records, nobody has ever made that big of a contribution to Blagojevich all at once. The idea of a $1.5 million contribution itself is so unbelievable that it’s almost laughable.

And a federal judge rules that a scheme to contribute $50,000 to appoint somebody to a state board is relevant to Levine’s claims and the government’s case, even though those campaign contributions never happened.

After looking at all this for several days, reading the claims and counterclaims from both sides, I can see why the governor’s office is so frustrated about the media coverage and the way the Rezko situation is developing. They’ve made plenty of mistakes - no doubt about it. And there is obviously some dirty stuff in this administration, which I’ve reported on time and time again here and elsewhere. But the apparent holes in the federal government’s case need a thorough, skeptical examination from the media, rather than the dismissive attitude reporters and columnists have had to date, myself included. It’s all about the prosecution so far.

Is Rezko telling the whole truth? Highly doubtful. But are we completely sure that Stu Levine is?