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The governor’s financial problems explained

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* I was wondering about the mentions on the surveillance tapes about the governor being financially strapped. The Wall Street Journal fills us in…

The criminal complaint against Illinois Gov. Rod Blagojevich repeatedly refers to his family’s financial troubles. Those problems include more than $500,000 in unpaid legal bills, according to people familiar with the matter.

Earlier this year, Mr. Blagojevich, strapped for cash and burdened by a years-long federal investigation into his administration, stopped paying a portion of the millions of dollars in legal fees owed to the law firm Winston & Strawn, according to these people.

Mr. Blagojevich’s attorney, Sheldon Sorosky, didn’t return several calls seeking comment.

As a result, these people say, Winston & Strawn stopped representing the governor, who is now embroiled in one of the most spectacular public-corruption inquiries in years. In the criminal complaint filed this week, federal prosecutors charged Mr. Blagojevich and his chief of staff, John Harris, with conspiracy to commit mail and wire fraud and solicitation of bribery. […]

It is unclear whether Mr. Blagojevich’s legal bills are for personal or campaign work or for both. Campaign filings show Winston & Strawn had charged the governor’s campaign fund, Friends of Blagojevich, nearly $2 million in legal fees through the end of 2007. The Winston & Strawn partner said the amount that remains unpaid exceeds $500,000. “If he asked us to represent him, we’d say no,” the partner said.

posted by Rich Miller
Thursday, Dec 11, 08 @ 2:19 pm

Comments

I am a bit surprised that the feds have not indicted the Blago campaign fund. The first thing they did was to indict Friends of George Ryan account to freeze his assets and that hasn’t happened here.

Comment by Joe in the Know Thursday, Dec 11, 08 @ 2:25 pm
Just wondering.

Thought he had a humongous campaign fund. Can’t he use that?

What happens if he resigns? No bodyguards; no security; no ‘pension’? Does he get to use the campaign fund as he chooses; after taxes?

Also heard Thompson say they didn’t drop him because of payments?

Comment by sal-says Thursday, Dec 11, 08 @ 2:26 pm
On this point I feel for Rod and Patti Blagojevich.

It does seem a perversion of justice for the prosecutors to cause an innocent public official to accumulate legal debt until the point s/he does something corrupt to finance his/her legal defense.

Of course, many of us have doubts about the legality of Blagojevich’s conduct that was being investigated by the feds.

But if the feds don’t have something solid from the early days, it does sort of seem like a kind of entrapment to apply financial pressure to someone until s/he does something illegal to finance his/her defense.

Comment by Carl Nyberg Thursday, Dec 11, 08 @ 2:30 pm
I was about to ask the same thing. Is the reason he is not resigning is so he doesn’t lose his body guards…look at the protection he has in that video from this morning…if he resigns, he’ll lose State Police protection.

Also, I asked this the other day, but things were crazy still….will the taxpayers be on the hook for any of his legal defense? He is being charged for actions associated with his official duties as Governor…

Comment by Nick Ponton Thursday, Dec 11, 08 @ 2:30 pm
BTW, is it ethical for a law firm (like Winston & Strawn) to extend credit to a client (like Blagojevich) to the extent that the debt becomes a motivation to violate the law?

Does Winston & Strawn have former assistant U.S. attorneys working there? Do these for asst U.S. attorneys benefit from their relationships with the U.S. attorney’s office?

The ARDC should have a rule that if a client engages in illegal activity to pay for legal debt then the law firm can be penalized. This would keep law firms from extending unrealistic amounts of credit to clients, especially clients who are criminals.

It doesn’t seem right that law firms create the motive for committing future crimes.

Comment by Carl Nyberg Thursday, Dec 11, 08 @ 2:35 pm
According to the State Board of Elections website, Friends of Blagojevich had $3M+ at the end of June. Even if he owes Winston Strawn $500,000, he still has somewhere near the $2M+ mark. Is that financially strapped?

Comment by anon Thursday, Dec 11, 08 @ 2:47 pm
How mortgaged is Blago’s home? Is there any equity in it?

Comment by Burton Natarus Redux Thursday, Dec 11, 08 @ 2:54 pm
I’m not sure I understand how this is entrapment. Fact is he continued to engage in corrupt behavior especially during the fact that he is investigation by federal authorities.

Also why was he so on the hook with W&S? Is it because of these investigations?

Whatever the case may be if he didn’t want to be under investigation he probably should have stopped while he was ahead.

Comment by Levois Thursday, Dec 11, 08 @ 3:02 pm
Perhaps if he didn’t need so much representation and legal advice in the first place he wouldn’t have such a high bill?

Comment by Anonish Thursday, Dec 11, 08 @ 3:09 pm
Carl I agree. I feel for Blago’s children and they should not pay for the sins of the Father.

Blago also needs his paycheck along with Patti, and that is why it will take the Courts or Springfield to displace him from Office. He is in for the long haul

Comment by Luis Thursday, Dec 11, 08 @ 3:10 pm
I believe a campaign fund is no longer available for personal use (referring to the paying taxes on it and using it as income.) But, surely it could be used to pay Winston and Strawn.

Why is the press after Patty? I am glad I am never taped while watching an Illini game. The picture of her on AOL is just awful.

Comment by Shelbyville Thursday, Dec 11, 08 @ 3:13 pm
Carl - You’re WAY off base. There’s no way that Winston & Strawn can be seen as bad guys because they allowed him to run up a bill. This is simply not a reasonably forseeable chain of events. Look, there are lots of cases here law firms want to withdraw because clients don’t pay and the judge won’t allow them to. If clients don’t pay, the law firm can get screwed. That’s why they have an economic incentive to limit huge bills.

It does make you wonder of the Guv’s lawyer is cutting him a big break. If he can’t pay Winston, how can he pay this guy? Sure hope the new attorney got a hefty retainer…

Comment by Cynic Thursday, Dec 11, 08 @ 3:15 pm
The fact is that these days it is incredibly expensive for anyone to properly defend themselves from federal investigations. Even mere witnesses who never face charges run up serious legal bills. Personally, I hope federal prosecutors realize how much of a financial burden that investigations place on people. I suspect that they do, and are extra careful to make sure they don’t put people through them for no reason.

Comment by Ron Burgundy Thursday, Dec 11, 08 @ 3:15 pm
Blago used to work for Sorosky.

Comment by Ravenswood Right Winger Thursday, Dec 11, 08 @ 3:16 pm
Carl,

You fail to realize that there are other much, much less expensive attorneys in the world then the ones at Winston and Strawn. The Gov chose to have them represent him with a full understanding of their billing rates. The notion that they are some how culpable is beyond ridiculous.

Comment by JohnnyC Thursday, Dec 11, 08 @ 3:26 pm
How strapped can they be if they could spend $100k just remodeling the family room? Unless, of course, somebody else paid. Where are those canceled checks again?

Comment by Anon Thursday, Dec 11, 08 @ 3:33 pm
JohhnyC, you’re right on. Nyberg’s assertions that 1) the Feds somehow entrapped Blago into taking desperate measures to pay legal defense bills they ’caused’ by investigating him, and 2)then blame Winston & Strawn for representing him, but not cutting him off at the first unpaid bill, is beyond the pale.

Carl, maybe you’d like to draft Durbin’s next letter requesting a presidential pardon for Blago. Include that argument, it’s a stunner.

Comment by Team America Thursday, Dec 11, 08 @ 3:33 pm
Timing really is everything…

From: OEIG, Newsletter
Sent: Thursday, December 11, 2008 3:22 PM

Dear Agency or University Director, General Counsel or Ethics Officer, and members of State Boards and Commissions:

The Office of Executive Inspector General (“OEIG”) is excited to provide you with its first edition newsletter (see attachment). This newsletter contains our observations about misconduct trends, prevention information, and other news relevant to our mission. Future OEIG newsletters may include case highlights; news of policy, rule or legislative changes that impact ethics in State government; and additional useful information to keep you apprised of developments at the OEIG.

Please share this newsletter by e-mail with each of your employees, trustees and commissioners, or vendors. Only with your assistance can we collectively maintain integrity and accountability in the operation of Illinois State government.

To avoid any confusion, please include the information that the OEIG does not accept complaints or letters submitted by e-mail, and will not respond to e-mail messages. Such communications must be phoned or faxed into our office, and individuals may call 1-866-814-1113 for further information.

Thank you for your cooperation.

James A. Wright, Esq.
Executive Inspector General

Comment by chicagoist Thursday, Dec 11, 08 @ 3:34 pm
I still believe that financial concerns may be playing a substantial role in his decision to stay on for a while, perhaps for quite a while.

I don’t believe he can use his campaign fund for personal expenses so he would presumably have to seek other employment. Even the Chicago Democratic Machine might have a hard time finding him a position that pays as well as his current one, although I’m sure they would try.

Comment by Cassandra Thursday, Dec 11, 08 @ 3:39 pm
Let us cut to the quick…Jim Thompson is an equal to Rod Blago when it comes to ethics.

Comment by You Go Boy Thursday, Dec 11, 08 @ 3:42 pm
You fail to realize that there are other much, much less expensive attorneys in the world then the ones at Winston and Strawn. The Gov chose to have them represent him with a full understanding of their billing rates.–JohnnyC

OK, but does Winston & Strawn know the salary of the governor? Winston & Strawn defended George Ryan, so they had a better idea about he number of hours it would take to defend the case.

What did it cost Winston & Strawn to defend Ryan? More than $5 million? Would you loan someone of Blagojevich’s salary $5 million without collateral? How did Winston & Strawn expect Blagojevich to pay his bills? Shaking down state vendors/contractors?

Comment by Carl Nyberg Thursday, Dec 11, 08 @ 4:00 pm
I think it’s safe to say the feds will provide ample security for Rod and family until he is sent to the klink.

As for money, I can see books and a made-for-TV movie in his future. Or, perhaps a reality TV show, “Governors on the Row.” People would go for that.

Comment by Lulu Thursday, Dec 11, 08 @ 4:01 pm
I agree with Carl and Ron. I feel bad for the Gov because the pressure put on the entire family may very well have pushed him to this. I am not excusing what I have read but legal costs are extremely burdensome even when you are not the target of the investigation. That is definitely a tool the prosecutors use to leverage their will on people. The complaint also never brings charges related to the investigation the Feds have been conducting for years. Everything is from recent conversations. Adds to the impression that the Gov was being cornered somewhat.

Comment by Anon Thursday, Dec 11, 08 @ 4:18 pm
Someone needs to tell Mr. Wright, Esq. that attorneys who put “Esq.” after their own names come off looking like arrogant jerks.

Comment by Ron Burgundy Thursday, Dec 11, 08 @ 4:53 pm
I noticed you’d closed comments on the previous post, and also in view of the family’s precarious financial position I just wanted to say that I basically share Alderman Mell’s feelings right now. I feel terribly sorry for the kids and even for the First Lady.

Comment by Angry Chicagoan Thursday, Dec 11, 08 @ 5:06 pm
Since it’s not a subject anywhere else, I want to point out the media pounding Patty is taking for dropping the F-bomb is hypocritical, sexist and another revealing moment of the shallowness of the MSM.

I talk like that with my friends and in private. Virtually everyone I know talks like that. Obviously, she had no expectation that she was being taped and it was going to be revealed to the world.

From what I’ve read over the years, and from what people who have done business with the family over the years say, she might be in legal trouble of her own. But get over yourself if you think her strong language is evidence of anything.

Comment by wordslinger Thursday, Dec 11, 08 @ 5:24 pm
I was surprised that Debra Mell said that the kids were told that dad was arrested. I think the five-year-old is too young to hear that.

Comment by Anon Thursday, Dec 11, 08 @ 5:28 pm
I cut off comments on that story for a reason. No more, please.

Comment by Rich Miller Thursday, Dec 11, 08 @ 5:39 pm
Blago has spent $2 million with Winston and Strawn, owes another 500 large, and is in this much trouble?

Granted, Rod’s a vulgar crook and not very smart.

But these Gibsons-lunching, mulligan-taking, Bulls-game-sweater-wearing, trophy-wifing mouthpieces peeled him like a banana.

Isn’t their Unique Selling Point the Thompson/ Webb (used-to-be) legendary run at the Northern District of Illinois?

From jailing the corrupt to robbing the corrupt. What a legacy.

Comment by wordslinger Thursday, Dec 11, 08 @ 5:44 pm
Why isn’t anyone looking into how much the most recent named state agency directors paid for their jobs.

Comment by Wondering Thursday, Dec 11, 08 @ 6:02 pm
Please forgive me this tiny bit of snark…

Now we know why Team Blago called the HOV lanes at the Tollway the “Green” lanes.

The Defendant’s financial woes have been an open secret in political circles up north. If one looks back to the pre-gubernatorial years, he was getting Congressional pay plus law firm “salary” plus Patti’s real estate income. His “outside income” at least the legit kind went to zip when he became Guv, and Patti’s work was whittled down to zip as Uncle Tony “exited” the real estate business.

The increasing desperation is apparent in Patti’s contrived commissions, the fumbled brokerage license deal (Note to Alexi: be careful who you take investment advice from) and ultimately what has unfolded this week.

word, that was a fabulous “banana” quote, but there may be more to it than is readily apparent. I would suspect until the dough ran out that the campaign fund was paying the legal bills for more folks than just The Defendant, and one would be amazed how fast the tab runs up with three or four clients with two billers each at the retail rate of at least $600 an hour up to $850 for the Thompson/Webb talent tier.

Bleep, Dad always said AA should have gone to law school.

Comment by Arthur Andersen Thursday, Dec 11, 08 @ 6:29 pm
I wonder what the OEIG’s latest “observations” about recent “misconduct trends” are.

Comment by Bookworm Thursday, Dec 11, 08 @ 10:27 pm
Carl, et al. Get a freakin’ grip! And take off the tin foil hats. Your comments are absurd. I was an employee of the state for 16 years. I had NO clout and I got my job on MERIT. I worked my butt off and worked my way up to middle management. Yes, I was PSA, but I got that position because I worked hard FOR THE PEOPLE OF THE STATE! Because I was a PSA I had a red X on my name when Crookojevich got elected. After two years of being whipped on like a rented mule I had to move on. My job and me were eliminated but my “position” was filled with a Blago hack the next week. Nobody held a fundraiser for me or my family. Rod and Patti deserve each other and whatever they get. The only victims in this mess are their kids and the state of Illinois.

Comment by Big Mama T Thursday, Dec 11, 08 @ 11:30 pm
I’m a state worker, too. My 24/7 unit has not had a new hire in several years and attrition has resulted in a severe shortage of manpower. We keep getting promises of new hires but never get them. In light of current events, I suspect we didn’t get them because Hot Rod couldn’t figure out a way to line his pocket.

To suggest this is all the FBI’s fault or his attorney’s fault is beyond the pale. Hot Rod is where he is because of his own actions!

Comment by Gritty Cog in Grinding Wheel Friday, Dec 12, 08 @ 10:28 am
I don’t think the Patti Potty Mouth’s language is as troubling as her apparent involvment/incitement of the deeds.

Comment by sal-says Saturday, Dec 13, 08 @ 9:11 am