Illinois `for sale' under Ryan, prosecutor says

Indictment gives details of governor's spending

December 21, 2003|By Ray Gibson and Rick Pearson | Ray Gibson and Rick Pearson,CHICAGO TRIBUNE

For decades, Illinois politicians have relied upon their campaign treasuries as personal piggy banks, paying for cars, gifts, expensive meals, sports tickets and country club dues to further their expansive lifestyles.

But in last week's indictment of George Ryan, federal prosecutors have alleged that the former Republican governor elevated that tradition to an art form. Ryan, they charged, bankrolled his extravagance not only by tapping his campaign fund, but also through kickbacks for himself and his family from cronies to whom he had steered state business.

Financial reports show that even as federal agents were tightening their investigation of Ryan and prosecuting his political operation in court, Ryan didn't throttle back on free spending underwritten by his campaign fund.

In the first half of this year, the reports show, Ryan used his fund to pay for dinners and catering at Chicago restaurants as well as meals and dues at the Kankakee Country Club. On the day after he left office, his campaign fund spent $619 on a "dinner meeting" at Riva's restaurant on Navy Pier and $176 for another "dinner meeting" more than 1,000 miles away at the Sanibel Steakhouse on a Florida resort island.

"If you read the indictment carefully, there was much fund raising done for the Citizens for Ryan campaign, and those funds, which often exceeded $1 million, were often used as personal expenses by George Ryan," U.S. Attorney Patrick J. Fitzgerald said in announcing the indictments Wednesday.

"What we're alleging in the indictment is that basically the state of Illinois was for sale, for friends and family at times."

State law allowed Ryan to use campaign funds for personal expenses as long as he paid income taxes on the expenditures. But the indictment alleged that Ryan understated the extent of his use of the fund for personal gain and underreported his tax liability.

Between 1997 and 2000, Ryan declared on his federal income-tax returns that he had converted nearly $47,000 in campaign funds to personal use. Though he held public office for decades, Ryan began releasing his tax returns only when he ran for governor in 1998. At the time, he refused to release returns from earlier years, saying that they would only show him to be a man of modest means.

In one year's return, Ryan detailed his personal use of $15,752 in campaign funds.

Among the expenditures was $710 for airline tickets to Jamaica, where close friend Harry Klein maintains a palatial estate. Ryan described the trip on the tax form as an "out-of-state campaign planning meeting."

Ryan's indictment alleges that he engaged in a scheme to hide the fact that Klein was giving him free lodging, then lied about it to federal authorities when they questioned him.

On his 1997 return, Ryan also said he spent $5,307 in campaign funds on "gifts to contributors and supporters," including $182 for a vacuum cleaner and $1,703 at a duty-free shop. Ryan also declared about $6,000 in entertainment expenses for contributors and supporters, including $3,672 for Bulls tickets.

Ryan's term as governor was clouded by the investigation from the start, and facing near-certain defeat if he ran again, he announced on Aug. 8, 2001, that he would not seek re-election.

On that same day, according to his campaign reports, his political fund spent $35,000 to buy a van from a Chicago Ford dealer.

Ryan's family also shared in the campaign spending bounty, authorities said. The indictment alleged that thousands of dollars in campaign funds were used to pay personal expenses of his kin.

"Ryan wrote and caused agents and employees of Citizens for Ryan [CFR] to write false and misleading notations on CFR checks issued to family members indicating that expenditures were for `consulting work' or `campaign work' when, in truth and in fact, the expenditures were gifts to family members," according to the indictment.

To obscure the fact that campaign money was going to family members, the cash was directed only to Ryan relatives who didn't share his surname, the indictment alleged.

As Ryan geared up his 1998 campaign for governor, finance reports showed that his campaign spent more than $3,000 on cigars from a Bourbonnais cigar shop. The shop was owned by Ryan's son, George H. Ryan Jr., who prosecutors also said benefited from a $6,000 loan provided by Ryan's close friend, businessman Larry Warner.

Warner, a ranking member of Ryan's "kitchen cabinet" of advisers, has been charged with extortion and influence peddling for allegedly using his relationship with Ryan to profit on state business deals.

Prosecutors also alleged that Ryan, who was the state chairman for the unsuccessful 1996 presidential bid of then-Texas Republican Sen. Phil Gramm, took advantage of the post to steer $10,000 in Gramm campaign assets to four of Ryan's daughters, even though they did no work.

Federal authorities granted immunity from prosecution to the four daughters to secure their grand jury testimony, sources said.

Though dipping into campaign funds to pay personal expenses has been a common practice among Illinois politicians, indictments for failing to pay taxes on the cash are extremely rare, legal experts said.

Since the 1970s only three other Illinois politicians have been convicted of similar tax charges: William Scott, a former Illinois attorney general; Walter Kozubowski, a former Chicago city clerk; and Mel Reynolds, a former Democratic congressman from Chicago.

The Chicago Tribune is a Tribune Publishing newspaper.

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