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* From the US Attorney’s office…
Seven defendants arrested today will begin appearing at approximately 3:30 p.m. today – before U.S. Magistrate Judge Jeffrey Cole in Courtroom #1838 in the Dirksen Federal Courthouse – with new federal public corruption charges expected to be unsealed at that time. Copies of the charges and a detailed press release will be distributed via email and the U.S. Attorney’s Office website after the charges are unsealed.
Do not speculate in comments We’ll all know soon enough. Don’t get yourself banned for life. Thanks.
*** UPDATE 3:51 pm *** From Ben Bradley’s Twitter feed…
The 7 charged are all fairly low level government employees. At least one is a Cook Co Sheriff.
*** UPDATE 4:00 pm *** One of those charged is Dean Nichols, who was once former Sen. Rickey Hendon’s campaign treasurer. From the US Attorney…
SEVEN DEFENDANTS CHARGED WITH BRIBERY CONSPIRACY TO OBTAIN
FICTITIOUS FEDERAL GRANTS AS PART OF FBI UNDERCOVER INVESTIGATIONCHICAGO — Federal corruption charges were unsealed today against seven defendants who were arrested and charged with bribery conspiracy for allegedly paying kickbacks to a purported federal agency official, who did not actually exist, in return for awarding purported $25,000 cash grants from the agency. The charges stem from an FBI undercover investigation of the defendants, who include a campaign treasurer for a former Illinois state senator and two Cook County Sheriff’s Department corrections officers. The defendants allegedly believed that they were able to obtain multiple $25,000 grants from the U.S. Department of Health and Human Services in exchange for returning $5,000 to the fictitious HHS official and others involved in the scheme.
In fact, there was no corrupt HHS official and no federal agency grants were involved. Instead, those elements were involved only as part of the scenario of the undercover investigation. Acting at the direction of law enforcement, a Cooperating Witness (CW) informed defendant Dean Nichols that the CW had a friend affiliated with HHS who was willing to provide $25,000 agency grants in exchange for kickbacks. After being offered this opportunity, Nichols allegedly presented CW with several other individuals, including co-defendants Reggi Hopkins, Elliott Kozel, and Anthony Johnson, who were allegedly willing to submit applications to obtain these grants in return for $5,000 kickbacks, which would be divided into $1,250 payments to four individuals: the fictitious HHS official approving the grants; an undercover FBI agent who was purportedly associated with the HHS official; the CW; and Nichols, according to the criminal complaint unsealed today.
Similarly, Kozel, a Cook County corrections officer, allegedly presented several other co-defendants, including his supervisor, Mary Smith, along with Bryant Jessup, and Regina Hollie, who were allegedly also willing to submit applications to obtain these grants in return for $5,000, which would be divided into $1,250 payments to the fictitious HHS official, the undercover agent, the CW and Kozel, the charges allege.
Nichols, 62, of Oak Park, was charged with three counts of bribery conspiracy, and Kozel, 51, Chicago, was charged with four counts. Hopkins, 43, of Chicago; Johnson, 59, of Chicago; Smith, 54, of South Holland; Hollie, 48, of Chicago; and Jessup, 51, of Chicago, were each charged with one count of bribery conspiracy.
All seven defendants were arrested today and were scheduled to appear this afternoon before U.S. Magistrate Judge Jeffrey Cole in Federal Court in Chicago.
The arrests and charges were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
As background for the investigation, the complaint affidavit states that Nichols was a treasurer of the campaign committee for a former Illinois state senator. While assisting the state senator’s campaign committee, Nichols allegedly helped steer State of Illinois grants to certain organizations, including a $50,000 grant to an organization operated by Nichols’ daughter from 2005 to 2006, and a $190,000 grant in 2007 to an organization operated by Hopkins with the understanding that a portion of the proceeds would go to Nichols and the state senator’s nephew.
The affidavit describes the CW as a Chicago police officer who began cooperating with the government in July 2008 during an investigation of public corruption and gun-trafficking in the Chicago area. The CW is not yet facing any criminal charges but will likely be charged in the future with attempted extortion and firearms-related offenses, the affidavit states. According to the CW, he has known Nichols for more than 20 years and they met when Nichols was an accountant for an auto repair business owned by the CW’s family. In the early 1990s, the CW managed a bar owned by Nichols. The CW and Nichols attempted to bribe a former Chicago alderman by offering $10,000 in exchange for the CW receiving a promotion within the Chicago Police Department, but, according to the CW and the former alderman, who confirmed the offer, neither the payment nor the promotion ever occurred, the affidavit states.
In July 2011, the CW recorded a conversation with Nichols in which the CW explained that the CW had “run into a friend” who was working for HHS and had authority to hand-out multiple $25,000 grants “like candy” in exchange for kickbacks. In discussing the opportunity, Nichols told the CW that they had to “get people that we trust,” the complaint states.
About a week later, the CW and Nichols met for lunch with the undercover agent, who was posing as someone working for a private agency that contracted with HHS to issue grants and who had the ability get $25,000 grants approved by bribing the fictitious HHS official. The three then allegedly discussed the volume of grants they could obtain and how the grants would be broken into installment payments, with a $5,000 kickback being paid after the grant recipient received the first $10,000 installment.
In August and September 2011, Nichols allegedly provided the CW and the undercover agent with grant applications for “Edutainment Services, Inc.,” listing Hopkins as president, and “Children’s Athletic Program,” listing Kozel as president. In a September 2011 recorded conversation, the CW told Nichols that Hopkins would be receiving the first grant and Kozel would receive the second grant. Nichols allegedly asked if the undercover agent could hand-deliver the checks instead of mailing them, and further conversation disclosed that Nichols was allegedly concerned about a federal investigation and avoiding federal mail fraud charges.
In a recorded meeting later in September 2011, Nichols allegedly provided the CW with 31 completed grant applications and said that he thought he and the CW could have as many as 40 grantees in total. Nichols allegedly calculated that he and the CW personally would obtain $100,000 from 40 grantees, and added that, together, they could buy “a big summer home” in Michigan if the grants worked out, the charges allege.
The complaint describes in detail the purported installment payments that were made to the grantees recruited by Nichols and Kozel and the alleged kickbacks that the defendants then paid from the proceeds. In November 2011, the CW audio and video recorded a meeting with Kozel in which the CW provided Kozel with a purported $10,000 grant payment, and Kozel said that he planned to take children who were purportedly going to attend his program “out for chicken wings, take them to Chucky Cheese“ and would also give them a tour of the Cook County Jail and talk about drugs, the affidavit states. In addition to recruiting Smith, his supervisor, as a potential grantee, Kozel said another potential grantee was his girlfriend and he had “made up” an organization for her, according to the complaint.
Nichols allegedly provided the CW with a grant application for Johnson’s organization, Children At Risk. State records show that Children At Risk received a total of $65,000 in Illinois state grants from 2006 through 2008. The affidavit cites a July 2008 published media report indicating that frequently no one could be found at an address for Children At Risk and quoted Johnson as saying the program was “in flux.” Kozel allegedly provided the CW with a grant application for Jessup’s organization, the J.A.M.A. Center NFP, which also received approximately $65,000 in Illinois state grants from 2006 to 2008.
The government is being represented by Assistant U.S. Attorneys Brandon Fox, Margaret J. Schneider, and Michael T. Donovan.
Each count of conspiracy to commit bribery carries a maximum penalty of five years in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The public is reminded that a complaint contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. [Emphasis added.]
*** UPDATE 4 *** Steve Rhodes published this passage from Hendon’s book “Backstabbers“…
It turns out [Dean] Nichols and [Patricia] Horton were candidates Hendon ran for the Metropolitan Water Reclamation District board. Their campaigns are Hendon’s prime examples in this book.
The way Hendon portrays it, the whole state was breathlessly watching.
Apparently delusional thinking isn’t the sole province of the governor’s office.
The funny thing is that - 40 pages later - after Hendon describes the painstaking process of getting his candidates on the ballot and surviving petition challenges, he decides later that “I now needed Dean Nichols to GET OFF THE BALLOT!!”
Why?
“It was clear to me from the beginning that we could come to this point. Both of my candidates filed on the first day and were in the lottery. Nichols pulled the third top ballot position and Patricia Horton pulled the fourth spot. There are twelve candidates running.
“I was trying to cut some deals and get other elected officials to carry my candidates but most of them would only commit to one of them.
“Some people liked Nichols while others preferred Horton. There was talk about me being greedy by trying to get two at one time. This can be disastrous to an elected official or a mover and shaker. Greed is not well received and ONE IS BETTER THAN NONE. So I met with Dean Nichols and explained our situation. If Dean agreed to step down Pat Horton would move up to being third on the ballot and this would give her a much better chance to get elected.”
Oy.
But that’s not all.
“I caught the opposition’s people checking out my sign sheets at the Board of Elections. They also requested my time sheets from my job at the Board of Review . . .”
posted by Rich Miller
Tuesday, Jul 17, 12 @ 2:25 pm
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Assistant State CIO Herb Quinde
Comment by Just Because Tuesday, Jul 17, 12 @ 2:35 pm
Seven huh? I knew Snow White was running with a bad crowd.
Comment by The Captain Tuesday, Jul 17, 12 @ 2:36 pm
Big Bill Thompson and Bathouse Coughlin and Hinky dink Kenna …just “feel” it
Comment by Oswego Willy Tuesday, Jul 17, 12 @ 2:38 pm
I wonder if Fox News has named them and declared the arrests to be unconstitutional?
Comment by Ready To Get Out Tuesday, Jul 17, 12 @ 2:55 pm
Patrick Fitzgerald. It’s a prank going away party…
Comment by Boone Logan Square Tuesday, Jul 17, 12 @ 3:00 pm
I know I’ll be banned for life but I can’t help myself…it’s Rich Miller!!
Comment by WazUp Tuesday, Jul 17, 12 @ 3:05 pm
“In a sweeping indictment of the culture of corruption and favoritism in Mayberry, federal authorities have arrested Sheriff Andy Taylor; Deputy Barney Fife; auxiliary deputies Otis Campbell and Gomer Pyle; and Beatrice “Aunt Bee” Taylor, Thelma Lou, and Helen Crump. Authorities accuse the seven of a pattern of corrupt behavior including aiding and abetting Ernest T. Bass in a rash of destruction of public property, trespassing by the Darling family, and moonshining by the Morrison Sisters. The seven were taken to the Mayberry County Jail where they were fed a meal of fried chicken, white beans, iced tea, and pie; and immediately escaped after finding the key. They were last seen with a loaded goat and should be considered armed and dangerous.”
Comment by Old Shepherd Tuesday, Jul 17, 12 @ 3:06 pm
New Romney ad titled “Chicago-Style” in…
Three…
Two…
– MrJM
Comment by MrJM Tuesday, Jul 17, 12 @ 3:07 pm
WazUp,
No, it’s not Rich … but we’re all going to be subpoenaed to tell what we know or suspect
Comment by RNUG Tuesday, Jul 17, 12 @ 3:23 pm
So much for a slow news day. A nice distraction from the weather though.
Comment by Casual observer Tuesday, Jul 17, 12 @ 3:25 pm
Saw the list at lunch. Surprised but not shocked.
Comment by Pedro Tuesday, Jul 17, 12 @ 3:29 pm
Welcome to Illinois, where the corruption keeps on happening!
Comment by BMAN Tuesday, Jul 17, 12 @ 3:30 pm
===Saw the list at lunch. Surprised but not shocked.===
Well, that makes me feel better …
Comment by Oswego Willy Tuesday, Jul 17, 12 @ 3:31 pm
What I find suprising is they could only find seven to charge.
Comment by Nieva Tuesday, Jul 17, 12 @ 3:35 pm
I’ve got this list and it’s F’n golden!
It’s 3:30PM, do you know where your elected official is?
Comment by Allen Skillicorn Tuesday, Jul 17, 12 @ 3:36 pm
That can’t tweet after being arrested, can they? That rules out some.
Comment by Skeeter Tuesday, Jul 17, 12 @ 3:37 pm
Ben Bradley @benbradley7
PS: I’m in court and can confirm he’s not. The 7 charged are all fairly low level government employees. At least one is a Cook Co Sheriff.
Comment by I'm Just Saying Tuesday, Jul 17, 12 @ 3:47 pm
- Pedro -,
What didn’t shock you about the list … that it was low level, or ….
Comment by Oswego Willy Tuesday, Jul 17, 12 @ 3:54 pm
Fioretti’s tweet is pretty funny, as was the related tweet suggested that elected officials should tweet off to assure us they are not there.
Comment by Skeeter Tuesday, Jul 17, 12 @ 3:55 pm
Let the little fish through the net, catch the big fish. Maybe a little practice for fitz’s replacement. Then on to the big fish.
Comment by dang Tuesday, Jul 17, 12 @ 3:56 pm
Congrats, “Teamster,” you’re banned for life!
Comment by Rich Miller Tuesday, Jul 17, 12 @ 3:57 pm
Rich- would you say he was “hoffa-ed”
Comment by mark Tuesday, Jul 17, 12 @ 4:02 pm
Don’t know why my post got deleted Rich — Sun Times is now reporting that Nichols was Hendon’s campaign Treasurer
Comment by ILPundit Tuesday, Jul 17, 12 @ 4:05 pm
Per @DaveMckinney: Following up @natashakorecki, Dean Nichols was treasurer of former state Sen. Rickey Hendon’s political fund, state campaign records show.
Comment by ILPundit Tuesday, Jul 17, 12 @ 4:06 pm
Oh no! Won’t someone think of the radio ads?
Comment by J Tuesday, Jul 17, 12 @ 4:09 pm
“A complaint contains only charges and is not evidence of guilt.
The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.”
Comment by Oswego Willy Tuesday, Jul 17, 12 @ 4:18 pm
Dean was not only Hendon’s Treasurer, but loaned his campaign around $14,000.
Comment by Yellow Dog Democrat Tuesday, Jul 17, 12 @ 4:18 pm
Am I wrong or did they just use entrapment to snare some low level nobodies who weren’t even interested in this crime until the cooperating witness (the only one not charged) pitched it to them?
Comment by The Captain Tuesday, Jul 17, 12 @ 4:20 pm
Prosecution goes upstream. First one to the flipper wins.
This is old-school federales prosecution, and I don’t mean that in a good way.
Do you really need to set up extravagant sting operations for small-fry? It’s shooting fish in a barrel. There was a lot of smoke in that crowd already over abuse of state grants and contracts.
I’m not defending dumb, small-time, corruption, but this is putting squirrel pelts on the barn wall. I’d rather see some Wall Street gangsters or Mexican cartel kingpins in the dock.
Comment by wordslinger Tuesday, Jul 17, 12 @ 4:26 pm
I suspect the tape recorders are working overtime right now as seven new canaries sing their songs. It’s going to be a long, sleepless night for some people on the west side tonight.
Remember, there is no honor among thieves. Also, first one on the bus gets the best seat.
Comment by 47th Ward Tuesday, Jul 17, 12 @ 4:26 pm
===I’d rather see some Wall Street gangsters or Mexican cartel kingpins in the dock.===
I agree 100% Word. But what is the US Attorney for the Northern District of Illinois supposed to do about Wall Street and Mexican drug cartels? Ignoring this relatively low-level stuff isn’t a good option, especially with our culture.
I suspect today’s announcement is part of a larger investigation that is moving forward. I also suspect someday we’ll see some bankers in the dock (LIBOR anyone?). There is enough room in the Bureau of Prisons for all of them.
Comment by 47th Ward Tuesday, Jul 17, 12 @ 4:35 pm
@The Captain -
Normally, this would be open to an entrapment defense.
However, in this case both the CW and a former Alderman confirm that Nichols was part of an earlier conspiracy to bribe a public official.
If Nichols claims entrapment, the evidence of the previous attempted bribery comes in, and his defense is blown.
FYI, in order to claim entrapment, you have to stipulate that you actually committed the crime(s) in question.
Lawyers — how’d I do on that one?
Comment by Yellow Dog Democrat Tuesday, Jul 17, 12 @ 4:41 pm
I see that it’s a treacherous defense for Nichols but it’s presumably available to the other 6 right? Not my area of expertise.
Comment by The Captain Tuesday, Jul 17, 12 @ 4:44 pm
Prosecutors have been stalking Hendon for years. Anyone within three degrees of him who took this bait has a screw loose.
Tip to the Insiders:
“If it sounds too good to be true, its probably a Federal Sting.”
Comment by Yellow Dog Democrat Tuesday, Jul 17, 12 @ 4:46 pm
@Captain -
The other defendants were not approached or recruited by the CW…According to the complaint, Nichols brought them in. Since he’s not a government agent….sorry, no entrapment.
How am I doin’ Bar Association?
Comment by Yellow Dog Democrat Tuesday, Jul 17, 12 @ 4:51 pm
BTW, I do have a small bit of sympathy for the four low-level defendants, in part because thy have no one to flip on.
Comment by Yellow Dog Democrat Tuesday, Jul 17, 12 @ 4:53 pm
Not quite correct, YDD. There has to be government inducement and predisposition for there to be entrapment.
Comment by Anonymous Lawyer Tuesday, Jul 17, 12 @ 4:58 pm
47, Chicago is a major international hub for the cartels. As far as Wall Street gangsters, perhaps I should have said LaSalle Street gangsters, such as MF Global, PFG and the Usual Suspects who have significant outposts here.
Certainly, the U.S. Attorney has jurisdiction for their major crimes committed here.
As far as these latest charges, I’ve seen this movie before. As with Derrick Smith, the federales set an extravagant sting with fake crimes to nail some small-time dummies.
This, in an era (after an era?) in which the feds pursued and prosecuted big-time Illinois machers for real crimes.
Now that Blago, Ryan, Levine, Cellini, etc., have been convicted, the feds have to manufacture crime to pursue corruption. It would be nice to think so.
http://www.chicagomag.com/Chicago-Magazine/The-312/June-2012/The-Chicago-Drug-Trade-Then-and-Now/
Comment by wordslinger Tuesday, Jul 17, 12 @ 5:07 pm
Young, you mean no predisposition.
Comment by Anonymous Tuesday, Jul 17, 12 @ 5:15 pm
Thanks Word, but I don’t think Jim Garrison is on Durbin’s short list for US Attorney.
We agree more than we disagree, but lots of people want to suggest Derrick Smith is the only bad guy in town in terms of political corruption these days. I think his case is symptomatic of much larger fraud that the feds are rightfully exposing and prosecuting. I think this case was underway when Smith stumbled into it.
And at least with this, unlike Silver Shovel, the feds aren’t leaving heaping piles of garbage all over the city in their zeal to convict small fry aldermen. So at least their manufacturing has gone green.
Feds prosecute when they beleive they can convict. They don’t prosecute when they believe they can’t prove their case. That’s the way it should work, but if you have evidence of LaSalle Street fraud, I’m sure the FBI would be interested in hearing from you.
Comment by 47th Ward Tuesday, Jul 17, 12 @ 5:19 pm
“squirrel pelts on the barn wall” WORD!
Comment by mark walker Tuesday, Jul 17, 12 @ 5:54 pm
Rollin’ Rollin’ Rollin’, keep them doggies rollin’!
Comment by amalia Tuesday, Jul 17, 12 @ 6:16 pm
It seems that even with the State’s horrible financial woes there is still a lot of money floating around in the form of small grants that are subject to this kind of petty corruption. Why not consolidate these small grants into larger amounts that can be tracked and overseen? I understand that there were no “real” grants involved in this sting, but this is the ocean these fish are swimming in.
Comment by wishbone Tuesday, Jul 17, 12 @ 6:54 pm
I know, I know its only the feds job. But saw Anita A recently. Between her and Lisa M., we’re really at a disadvantage against the corruption. Nothing to see here, right L and A?
Comment by park Tuesday, Jul 17, 12 @ 6:59 pm
–That’s the way it should work, but if you have evidence of LaSalle Street fraud, I’m sure the FBI would be interested in hearing from you.–
I don’t know why you would think that. Our experience the last few years is that whether you’re Wells Fargo, or Bank of America, or Goldman, et. al., you agree to hundreds of millions in fines with the Justice Department or SEC without admitting guilt and then go about your business like nothing happened.
The only guy not playing ball so far is Justice Rakoff in Manhattan who wouldn’t accept the $285 million plea agreement for Citibank’s fraud (without wrongdoing, of course) and seems determined to have some of these boys answer questions under oath.
What a concept. And Jim Garrison nowhere in sight.
Comment by wordslinger Tuesday, Jul 17, 12 @ 8:06 pm
–I know, I know its only the feds job. But saw Anita A recently. Between her and Lisa M., we’re really at a disadvantage against the corruption. Nothing to see here, right L and A?–
In this case, it was bribes for fictitious federal grants paid to a fictitious federal official. I don’t think even a fictitious attorney general or fictitious state’s attorney would have jurisdiction, fictitious or otherwise.
Comment by wordslinger Tuesday, Jul 17, 12 @ 8:09 pm
LIBOR just cost the Chairman and CEO of Barclays, London’s biggest bank, their jobs. They’ve just been cut loose from 8 figures jobs as masters of the universe. Now the British Parliament has opened an investigation.
Tim Geithner is possibly implicated in LIBOR as far back as 2007, so neither Treasury nor Justice is terribly interested in looking into the matter so far, but they are paying attention to the BBC and the Economist. So are a lot of people.
Meanwhile, in a parallel universe, Darrell Issa wants to know why ATF was conducting an undercover illegal gun sale investigation.
Give the interim USA a break. Are these people small time? Yep. But it wasn’t like the feds had to do anything more than insert a con man to lure a few more small time con artists. That’s hardly manufacturing a crime. And this is a small part of a larger investigation.
And it might not happen tomorrow, but we’re going to see some bankers in jail, and God-willing, the Cartels and their local murderers too. Drudge thinks the murder rate is too high in Chicago. Apparently he hasn’t been to Mexico recently.
Perspective and patience is all I meant.
Comment by 47th Ward Tuesday, Jul 17, 12 @ 8:23 pm
47, lol, just came across this one, right in my wheelhouse, about those rascals at HSBC.
From today’s WSJ:
–The biggest problem Senate investigators found was HSBC’s Mexico branch, which moved billions of dollars of bulk cash through HSBC’s U.S. bank despite suspicions that client accounts were being used for laundering of drug cartel and other illicit funds. Despite repeated warnings over years from regulators and from its own internal compliance experts, executives pursued profits instead of shutting down the suspicious accounts, the senate investigation found….–
–The money-laundering allegations also are at the center of a continuing Justice Department investigation. As previously reported by The Wall Street Journal, the bank and U.S. authorities have accelerated talks aimed at a settlement in the matter, according to people familiar with that probe…–
I sure hope HSBC and the Justice Department, those crazy kids, can hurry up and reach a settlement before anyone would have to do something as unpleasant as testify under oath as to their business model.
After all, respectable banker boys will be banker boys and laundering billions in bulk for some entrepreneurs in Mexico is just friendly.
Pay the fine, back to work.
Comment by wordslinger Tuesday, Jul 17, 12 @ 11:36 pm
@Anonymous Lawyer -
I think that’s what I said. Nichols previously attempted bribery, so he demonstrated predisposition. Defense blown.
The other defendants were approached by Nichols, not induced by the government, so they have no defense either.
This is a very different case, I’d point out, than Derrick Smith’s case. There’s been no evidence that he was predisposed to bribery. And the government informant approached him first.
Comment by Yellow Dog Democrat Wednesday, Jul 18, 12 @ 7:19 am
Elliott Kozel was involved in a scuffle with former Chicago alderman and Cook County Board of Review Commissioner Robert Shaw a few years ago. There was a dispute about Kozel collecting nominating petitions for rival candidates in Dolton where the Shaw was named Inspector General by his late brother.
Comment by Esquire Wednesday, Jul 18, 12 @ 8:16 am