AMERICAN FRAUD and The Tylenol Murders

THE TYLENOL MURDERS     Crime Scene     The Cover-up     The Players     Interesting Persons     Chicago Outfit     Posse Comitatus     Marketing Tylenol     Tylenol Lawsuits     J&J Liability     News      
Where Are They Now
Tylenol Task Force
Tylenol Power-brokers
Milt Ahlerich
Robert Andrews
Richard Brzeczek
Jon Burge
James Burke
Burke Interview
Jane Byrne
H. Stuart Campbell
Joseph Chiesa
Edward Cisowski
David Clare
Tyrone Fahner
Larry Foster
George Frazza
William Grigg
Arthur Hayes
Robert Kniffen
Jeremy Margolis
Joseph McQuaid
Terry Mee
James Murray
Wayne Nelson
Mark Novitch
Donald Perkins
Thomas Royce
George Ryan
Michael Schaffer
Thomas Schumpp
Richard Schweiker
Robert Stein
James Thompson
Carl Vergari
Dan Webb
William Webster
William Weldon
Frank Young
FBI
FDA
Owen McClain
Joe Birkett
Jim Ryan
Colleen Goggins
Proprietary Association
 JAMES THOMPSON
 
   JAMES Robert THOMPSON - Republican Governor of Illinois from 1977 to 1991, was also known as "Big Jim Thompson."
 
From 1959 to 1964, he served in the Cook County state's attorney's office. In 1971, he became U.S. Attorney for the Northern District, where he obtained a conviction against former Governor Otto Kerner Jr., for his use of improper influence on behalf of the racetrack industry. He also tried and convicted many of Chicago Mayor Richard J. Daley's top aides, most notably Alderman Tom Keane, on various corruption charges.  Thompson was criticized for only prosecuting aging Democrats (more high-profile, than influential), while ignoring Republican and organized-crime suspects (even though Illinois was enduring the worst era of organized crime since the 1920s/Al Capone era).
 
Thomson was first elected in 1976, for a transitional two-year term, as Illinois changed to an off-Presidential year gubernatorial election. He held the office for 14 years. He was re-elected in 1978, defeating State Superintendent Michael Bakalis. In 1982, Thompson was very narrowly re-elected over former U.S. Senator Adlai E. Stevenson III, in a disputed election.

 

Thompson followed Daniel Walker into the Governor's mansion. Walker, a Democrat had been plaqued with allegations of corruption and unsavory bedfellows. One decade after being voted out of office Walker's dirty dealings caught up with him.

(In the 1980s, Walker entered the private sector with Butler-Walker, Inc, a chain of self-named quick oil-change franchises later bought out by Jiffy Lube and a pair of troubled Savings and Loans. In 1987 he was convicted of improprieties related to the First American Savings & Loan Association of Oak Brook. He reportedly received over a million dollars in fraudulent loans for his business and repairs on his yacht, the Governor's Lady. The First American Savings & Loan Association of Oak Brook was declared insolvent with a deficit of $23 million and was later bailed out by the Federal government. He was sentenced to seven years in federal prison, and served 18 months at a Duluth, Minnesota correctional facility.)
 
On November 12 1980, Thompson, by his executive order, instituted a hiring freeze for all state agencies, boards, bureaus, and commissions under his control as governor. The order affected approximately 60,000 state positions. These positions could only be filled if the candidates were first approved by an office created by Thompson, the Governor's Office of Personnel. The practice essentially consisted of denying the hiring of persons not affiliated with the Republican Party by conducting inquiries into past Republican Party affiliation and possible future pledges of loyalty.

 

Thompson retired in 2007 as chairman of the law firm of Winston & Strawn, headquartered in Chicago. He first joined Winston & Strawn in 1975 and then rejoined the firm as a partner when he left the governor's office in 1991. Thompson practiced law in the area of government relations and regulatory affairs as well as in international and domestic corporate and litigation matters.

 
The firm has lobbied for American Airlines, and he has previously represented United Airlines. Winston & Strawn is the same firm that represented former Illinois Governor George Ryan pro bono against federal charges relating to the "Licenses-for-Bribes" scandal during Ryan's tenure as Illinois Governor and Secretary of State. Ryan was convicted on all 18 counts, which included racketeering, misusing state resources for political gain, and fraud. He was sentenced to 6 1/2 years in federal prison and began serving his sentence on November 7, 2007.
 
 
Thompson is a member of the Trilateral Commission, as is former J&J CEO James Burke. 
 
He was also a director and head of the Audit Committee for Hollinger International, the media company founded by Conrad Black, when it was the subject of a Securities and Exchange Commission investigation and conviction. Conrad Black is an inner-core member of the Bilderberg Group.
 
From 2003 to 2004 Thompson served as a 911 commission member, where he came to President Bush's defense by aggressively questioning Richard Clarke. He is a Commissioner on the National Commission on Terrorist Attacks Upon the United States
 
Thompson is one of several politicians, including Rod Blagojevich and Illinois Senator Dick Durbin, who have been recently working on getting a presidential pardon for George Ryan, but Thompson believes the current controversy could make that difficult.
 
 
 
October 4, 1982

 

Illinois Gov. James R. Thompson said the state was pouring millions of dollars into the hunt "for the mad Tylenol killer, a killer who is putting a state, indeed a nation, into fear."

 
 
Thompson Celebrates 1,000th Wagreens Store
 
The 1,000th Walgreens store, located at the intersection of Dearborn & Division in Chicago, opened at 9:00 a.m. on September 6, 1984. The ribbon cutting ceremony was presided over by Illinois Governor James R. Thompson and the movie legend Cary Grant.
 
 
 
 
Another test of coattails in 1982 by ROBERT KIECKHEFER
 
In 1981, Governor Thompson appointed Secy. of State Jim Edgar to replace Alan J. Dixon after Dixon was elected to the U.S. Senate.
 
He brought in Tyrone Fahner after William J. Scott was convicted on federal income tax charges. Both Edgar and Fahner have worked closely with Thompson and were regarded as part of his inner circle. Thus, their appointments raised charges Thompson was trying to build a personal dynasty in state government. 
 
When Rep. George Ryan then agreed to stay in the House and run for speaker rather than insist on having the secretary of state's job, talk increased about Thompson's influence. And when the governor intemperately meddled in the Senate president's race to put Republican David Shapiro on the podium, the talk turned to the govrnor's "Gang of Four."
 
Both Fahner and Edgar are pledged to run next year for full terms. The governor made them promise before he appointed them. So the question naturally arises: How much impact will their relationship with the governor have on Fahner and Edgar in next year's election.
 
They both deny they are counting on their mentor for major campaign help. "Jim Thompson's not going to elect me in 1982," Edgar said in an interview. "I don't expect him to turn his back on Ty Fahner and myself. But I've got to get myself elected in '82." "We're on our own," Fahner agreed.
 
Each has sought issues he could use to gain wider name recognition. Fahner picked open meetings knowing it would be popular with the press and Edgar worked on auto safety, including improvements in the state's drunk driving laws. Fahner ran into opposition from local politicians, and Edgar was hampered by a television probe of corruption in some of his drivers' license stations. But both appear to be on the way to developing good, if not outstanding, reputations as administrators and public officials.
 
But it's equally clear that each of them is relying on Thompson to be his "entree" into GOP society. Each, in fact, got sort of a debut from the governor when he entered statewide politics.
 
Fahner, noting he has been well-received by the GOP faithful in many counties, said Thompson telephoned "50 or 60 people before he appointed me. That has carried me a long way." And Edgar noted that when Thompson asked him to give up his Illinois House seat and join the administration, "He came to my district to explain why he wanted me to leave right after they had elected me."
 
When push comes to shove, it's obvious that Fahner and Edgar will be perceived by the voters as part of a Thompson "team". They will be joined, many feel, by a new, hand-picked candidate for lieutenant governor. And that would bring us back to a new "Gang of Four" - Thompson, Fahner, Edgar and a fourth player to be named later.
 
 
 
 

By CHARLES N. WHEELER III

Gov. James R. Thompson, 1977-1991:
the complete campaigner, the pragmatic centrist

 


Photo by Terry Farmer
James R. Thompson,
Illinois governor, 1977-1991
On January 14, a remarkable era in Illinois politics and government will draw to a close. Hand on Bible, Jim Edgar will take the oath of office as the state's 38th governor, and after 5,117 days in office, James Robert Thompson Jr. will no longer be the state's chief executive. The mark that Illinois' longest-serving governor leaves upon the state may well be indelible, from the glass walls of Starship Illinois in the Chicago Loop to the rustic outposts of Dixon Springs prison boot camp in deep southern Illinois. During his eventful years, Illinois' economy survived the nation's worst times since the Depression and continued its post-World War II evolution from a manufacturing and agricultural base to one in which high tech, service industries and tourism are key components.

 

At the helm throughout was Thompson, eager to shape government in order to nurture the change and to prepare Illinois for its role in the global economy of the 21st century. Along the way the governor, too, evolved:

 

�   From a crime-busting federal prosecutor who put away some of the biggest names in the Cook County Democratic machine to a canny wheeler-dealer ready to reward friends and contributors with prestigious appointments and lucrative no-bid contracts.

 

�  From a neophyte first-termer chided for a do-little agenda to the author of Build Illinois, the state's most massive public works program enacted in modern times.

 

�  From a party outsider berated by Republican chieftains for giving jobs to Democrats to the architect of a GOP patronage operation so blatant it forced the U.S. Supreme Court to take notice.

 

After 14 years, the Thompson record includes a host of impressive accomplishments, tempered by some notable failures and even a few downright embarrassments. More than anything, it's a record of sometimes surprising contrasts, dominated by the personal charm of a man it's almost impossible not to like.

 

What will future historians make of Thompson, who arrived on the state scene in 1977 bringing "Camelot to the cornfields," in one reporter's words, and who will leave as a self-described "Boss Tweed of modern-day patronage" next month? On one point, at least, there is likely to be scant disagreement: Big Jim was among the most gifted campaigners the state has ever seen, able to reach out beyond a Republican base and appeal to Democrats, independents, Illinoisans of any and all political persuasions.

 

He may have started slowly long-time associates recall that he seemed almost shy, diffident, when he first took to the campaign trail and the county fair circuit back in the summer of 1975 but his quick wit, affability and boyish charm made him a natural. One of his pollsters confided early on that Thompson was among the very few candidates he'd ever handled who actually inspired people to want to vote for him.

 

Perhaps his self-effacing manner touched the egalitarian spirit so deeply rooted in our culture. Leave the button-down, suit-and-tie look to other candidates; Thompson preferred blue jeans, T-shirts and a good time along the way, and he could be equally at home knocking back early-morning shots of Lebanese "white lightning" with Cat workers at an East Peoria bar or clapping along with worshipers at a west side Chicago church.

 

Chronicling a Thompson visit to a Monmouth parade in 1986, one reporter wrote:

 

"The small-town crowd applauds. The governor romps to the sidelines to mug for camera-clicking spectators. His getup is a sight to behold: The governor, a 50-year-old man, is decked out in a gaudy purple and white Western Illinois University basketball warmup suit and matching high-top sneakers.

 

"Having worked up a sweat by the end of the parade route his fifth parade of the week the governor stops off at a porch party for an ice-cold beer and plops down to relax on the front stoop. How about a refill? Sure. How about a shot of tequila? He holds out his palm for a dash of salt and it's bottoms up.

 

"'This is fun,' he says after the parade."

 

Thompson's relaxed manner sometimes irritated his Democratic opponents, particularly Adlai E. Stevenson III, whose own patrician air was little help in his two losses to Thompson. When an earlier foe, Michael J. Bakalis, groused that Thompson's casual manner and pet dogs won him vacuous and uncritical TV exposure, the governor responded, "That's his hang-up, not mine. I can't help it if he doesn't like dogs."

 

After Thompson's decision not to seek a fifth term, some pundits speculated that he would have been a sure loser. In fact, one suggested, the governor might owe his previous victories to luck as much as talent.

 

Recall, however, that he defeated some pretty well-regarded names among Democrats; Secy. of State Michael J. Howlett, as likable a candidate as ever was; Bakalis, the incumbent comptroller and a rising star in the John F. Kennedy image; and Stevenson, a former U.S. senator and product of one of the state's most revered political lineages. None had lost an election before tangling with Thompson.

 

And, one suspects, there's a good chance that Thompson could have added Neil F. Hartigan to the list; clearly, neither Democrat Hartigan nor Republican Edgar could be ranked in Thompson's class based on their recent performances. Indeed, Thompson felt compelled to jump into the campaign twice, lashing Hartigan for what he called "distortions" of his record and belittling the Democrat's budget-cutting plan.

 

"Is it difficult to be a spectator?" asked a reporter, a few days before the election. "I knew I was going to be frustrated no matter how the campaign ran standing on the sidelines, but that's normal," said Thompson. "And I knew I was going to be attacked, and that my record would be attacked. That's normal and that doesn't bother me. But I'm enormously frustrated when after I've done 14 budgets, I look at this and he's floating by on it, and it can't happen. It's impossible. And nobody's saying it."

 

In his own mind, Thompson believes his finest achievement has been his management of the state's finances. In his 1990 State of the State message, delivered before a joint session of the General Assembly, the governor declared: "And here, here is our proudest accomplishment. In the last 13 years; you're not going to believe this, so I'm going to say it real slow and real plain.

 

"In the last 13 years, state government has delivered efficiently more services in more areas to more people than at any time in our history. Whole programs that didn't even exist in 1977 thrive now."

 

"And yet, the share of the dollars that we take from our people's income in Illinois to do all that is lower not higher lower than it was in 1977."

 

"Imagine that. More government, better government, costing you less in 1990 than it cost you in 1977. "Put that in your reelection brochures, Democrats and Republicans."

 

"In very simple terms, Illinois state government takes a smaller share of its citizens' income today in taxes than we took in 1977 when I stood here for the very first time."

 

"We take less, but we do more."

 

Indeed, the numbers bear him out: Adjusted for inflation, the state spent 12.8 cents for every $1 of personal income in fiscal 1977, compared to 10.8 cents in fiscal 1990. In constant dollars, the state spent $11.3 billion last fiscal year, compared to $11.5 billion in 1977.

 

Yet Thompson's fiscal record forever will be sullied by the popular belief that he lied about the state's financial health in his 1982 and 1986 campaigns. The story holds that both times the governor said the state was in good shape and "promised" not to raise taxes, only to propose tax hikes after reelection. In fact, while the fiscal picture he painted was not as depressing as the "gone-to-Hell-in-a-handbasket" portrait sketched by his two-time Democratic opponent, former U.S. Sen. Stevenson, Thompson made no such promises. Still, as he himself conceded, "It's part of the mythology now."

 

Taxes were not raised during his first two terms because Thompson and the General Assembly combined to hold the line on spending, and double-digit inflation fattened tax collections. To keep the ship of state afloat in the early '80s as the recession took hold, medical care for the poor was slashed, state workers were laid off, and school aid was pared.

 

When Thompson finally proposed raising income tax rates in 1983, the state faced an immediate $300 million budget gap largely because the recession shredded initial revenue estimates. Moreover, an additional $800 million would have had to be carved out of the 1984 budget. Income tax rates went up for only an 18-month period, while the sales tax was permanently upped a penny. Higher gasoline taxes and license plate fees also were approved to help bankroll the largest road program in state history.

 

Thompson again sought higher income taxes to bolster school funding in 1987 and again in 1988, but he could not budge House Speaker Michael J. Madigan (D-30, Chicago). The governor declared he would no longer campaign actively for the tax increase early in 1989, only to have the powerful Democrat ram through his own plan for a temporary 20 percent hike a few months later. Other taxes were raised during Thompson's last two terms - twice on cigarettes, again on gasoline - while new items were taxed, like private used car sales, out-of-state phone calls, soft drinks, photofinishing and computer software. Most were linked to specific programs such as roads or Build Illinois.

 

At the same time, the state's tax structure was becoming less regressive: The sales tax was eliminated from food and drugs, and utility taxes were tied to energy consumption rather than the price of electricity or natural gas. In all, Illinoisans have received more than $8 billion in state tax relief during Thompson's tenure, according to estimates by the Illinois Legislative Economic and Fiscal Commission.

 

On at least one other occasion, the governor's carefully polished image of fiscal integrity was undone by a celebrated faux pas � his 1978 pay raise pirouette, coming just days before his second inauguration. In less than seven hours, the lame-duck legislature voted itself and the governor $8,000-a-year pay raises and then made them law over his immediate veto, conveniently made by his autopen in plenty of time for an override while he vacationed in South Carolina.

 

The ensuing public outrage forced Thompson to call a special session to roll back the raises and provide phased-in increases. But these actions did not stem the drive for the 1980 Legislative Cutback Amendment, which eliminated one-third of the House. In his second inaugural address, a chastened governor told Illinoisans he was sorry for his part in the scheme: "You were right," he told angry citizens, hundreds of whom had sent him used teabags in protest, "and I apologize."

 

Yet he never abandoned his belief that better pay was crucial to attract top-flight talent to public service, campaigning throughout his tenure for pay raises for judges, cabinet directors and other key officials.

 

Thompson's penchant for rapprochement with the legislature was born of personal preference and political necessity. The new governor set the tone from the start: 'There will be no tactics of confrontation, no politics of division," he said in his brief inaugural address in 1977. It was a marked � and most welcome � change from the man he replaced, Democrat Dan Walker, who four years earlier told lawmakers: "The free ride is over." Walker's deliberate confrontational style produced four years of debilitating warfare between the executive and legislative branches, even though his fellow Democrats controlled both chambers his final two years.

 

Thompson, in contrast, never had the luxury of a Republican General Assembly. In only one two-year span, 1981 to 1983, did his party control a single chamber, and even then the GOP grasp was tenuous because of the hold House Minority Leader Michael J. Madigan had on some city Republicans. Thus Thompson has been a conciliator, a compromiser, a consensus seeker who has enjoyed enormous rapport with a legislature in which his party has been a consistent minority.

 

Only once was the spirit of cooperation truly violated, but the exception to the rule produced no long-lasting ill will. In perhaps the boldest political move of his career, the governor in 1981 tried to snatch Senate leadership from a badly splintered Democratic majority. As called for by the Constitution, the governor was presiding over the Senate at its first meeting to choose its own presiding officer. While the 30 fractious Democrats squabbled, with dissident holdouts refusing to support the reelection of Senate President Philip J. Rock (D-8, Oak Park), Thompson declared elected Sen. David C. Shapiro, an Amboy dentist who was the unanimous choice of the Senate's 29 Republicans. Ultimately, the Illinois Supreme Court sorted out the mess, declaring that the votes of a clear majority of the 59 senators, or 30 votes, were needed to elect a Senate president, not just a plurality of the votes cast. Rock, an intensely decent man, harbored no grudges and, in fact, stood by Thompson more steadfastly in later budget battles than did Republican legislative leaders.

 

A more chronic irritation was the amendatory veto power. Lawmakers complained throughout Thompson's tenure that too often he remained above the legislative scrap as issues were hammered out, then stepped in after the fact to rewrite the bill with an amendatory veto. House Speaker Madigan was perhaps the loudest critic. The speaker ultimately resolved the issue by in effect consigning the revisions he didn't like to parliamentary limbo.

 

Thompson's role as a compromiser was easier because of the relationship he envisioned with the legislature, that of a partnership. A recurring theme in each of his State of the State messages was the accomplishments we've made, the challenges we face, always in tandem, working cooperatively for the people.

 

"You have to understand that making government work for people is a shared partnership," he once reflected. "You just don't go in and command the General Assembly to do something; you work with the General Assembly."

 

His conciliatory style enabled Thompson to bring business and labor leaders to the bargaining table to fashion landmark unemployment insurance and worker's compensation packages that helped mend the sorry image of the state's business climate. In part, Thompson was able to broker such deals � and enjoy cordial relations with organized labor throughout four terms � because he was not a rigid ideologue, often to the consternation of those who complained that the governor had no sweeping vision, no philosophical agenda, for the state but merely reacted to each new crisis as it came along. Of course, Thompson was a prosecutor, not a philosopher, before his election; his case-by-case approach to managing state government reflected his legal training and experience.

 

While the national Republican party turned hard right, Thompson remained a centrist; while a conservative White House collided with a liberal Congress, pragmatist Thompson colluded with a horse-trading legislature. The governor never acted as though his administration held a monopoly on good ideas; some of his most significant achievements were products of compromise, emerging from the legislative process in much different form than the governor's original proposals.

 

Consider, for example, his Class X plan for fixed prison sentences for serious crimes, or his Build Illinois program, or even the temporary � rather than permanent � income tax increase of 1983. He also was keenly aware that individual legislators had to return to their districts with something to show for their service. Often, that something turned out to be a project folks back home viewed as an important local improvement and skeptics elsewhere derided as a dip into the pork barrel.

 

Thompson's willingness to deal with Democrats and to settle for half a loaf, rather than go hungry, generally stood him in good stead over the years. "I can't think of a single, major initiative that I have requested from the General Assembly that I haven't eventually got," Thompson reflected after the 1989 session.

 

Less selective memories probably could be found among supporters of such woebegone causes as the Equal Rights Amendment or merit judicial selection, issues to which he's paid at least lip service. Folks who flocked to sign the so-called Thompson Proposition in 1978 are still waiting for the lid on state taxes and spending they thought they were getting. And it must have been tiresome for the governor to see his vetoes overridden with such impunity. Though it would be difficult to compile the statistics, it's probably a safe bet that Thompson was overridden more often than all his predecessors in this century combined.

 

But the successes were often spectacular and sometimes came in dramatic fashion, perhaps none more so than the last-second, June 30 House vote in 1988 that kept the White Sox in Chicago. The governor himself worked the Senate and House floors that night, cajoling GOP support for a new stadium. You can bet he'll be there for Opening Day 1991, even if as a private citizen he has to pay his own way.

 

The new Comiskey Park. The State of Illinois Center. The new Arlington International Racetrack. Diamond-Star Motors. Sears, Roebuck and Co. More than 14,000 miles of highways improved, almost 5,200 bridges repaired. Fifteen new prisons. Bricks and mortar, ribbons of concrete. Tangible responses to specific situations, they are demonstrable proof of Thompson's achievements as a builder.

 

Even some of the governor's successes, though, have proven to be headaches. His vaunted Class X, for example, has combined with the war on drugs to keep Thompson scrambling to build prisons fast enough to house the influx of new inmates. Despite earmarking almost $750 million during his tenure for improvements, including adding almost 15,500 new beds, the state prison system remains dangerously overcrowded. Moreover, the incentive packages that wooed Diamond-Star and Sears were scorched by state auditors in a scathing report that charged mismanagement, sloppy recordkeeping and possibly illegal lending activities by the state economic development agency that Thompson created.

 

He has struggled, sometimes seemingly in vain, with the state's more intractable problems, those net lending themselves to a concrete solution. Thompson's lowest marks come in education and human services. Most frequently, advocates chastised the governor for not adequately financing programs; but in some cases, even a blizzard of dollars failed to yield the hoped-for results.

 

School administrators in particular grew weary of hearing the governor � like almost every other elected official proclaim that education was his No. 1 priority, while the share of the state budget dedicated to elementary and secondary schooling dipped to about 25 percent from 30 percent during his tenure. Meanwhile, the burden for financing local schools increasingly fell on real estate taxpayers; the state share of the bill for elementary and secondary education was 47 percent during the 1976-77 school year; it slipped to an estimated 38 percent last school year. Moreover, one out of every five Illinois school districts was on the state Board of Education's financial watch list last school year.

 

Thompson should be credited, however, for his role in ramrodding an $875 million financing package early in 1980 to save Chicago schools from bankruptcy. He was also a key player in crafting a visionary educational reform package in 1985 (though inadequate funding has blunted its effect).

 

Perhaps the administration's most acute shortcomings occurred in human services, particularly mental health. Despite a decade of reports � including some by task forces named by Thompson � state institutions remain one step ahead of federal watchdogs, while community providers struggle to handle burgeoning caseloads with skimpy state assistance.

 

Poor people's advocates charged that Thompson's showcase welfare reform programs were more image than substance. Project Chance, a welfare-to-work initiative, was revamped in response to complaints that it was unduly punitive. The Illinois Hospital Association, meanwhile, has sued the state, charging low payments under the Department of Public Aid's competitive contracting system have contributed to the closing of 16 hospitals in recent years. Even with last January's 7.5 percent increase the first since 1985 welfare grants provide less than half of the minimum amount the Department of Public Aid calculates is needed for a poor family to survive.

 

In some instances, results were disappointing even when Thompson and the General Assembly poured dollars into programs. Funding for the Children and Family Services Department, for example, increased sharply to $472 million in fiscal 1991 from $114 million in Thompson's first year, yet reports of child abuse continue at staggering levels, and child care workers labor under caseloads far above national guidelines. Similarly, Illinois fell short of the national goal of reducing infant mortality despite intensive efforts over the last six years. The goal by 1990 was to have no more than nine deaths for every 1,000 live births. State public health officials are heartened, however, that this year's estimated 10.2 rate is considerably below the figures from a decade ago.

 

Public health also was the setting for one of the administration's most serious failures. The Illinois Department of Public Health badly handled the 1985 salmonella outbreak, the worst in the nation's history, that killed six people and sickened 17,000 others. Although early evidence pointed to contaminated milk from Jewel Food Stores' Hillfarm Dairy in Melrose Park, the Department of Public Health waited 11 days to force its closing. In the midst of the crisis, Thompson fired his public health director after belatedly discovering that the official had been vacationing in Mexico for a week, while the governor assumed he was heading up the investigation.

 

At the same time, Thompson has earned praise for his skill at bringing talented people into state government and moving them into high-ranking jobs, including several department heads who've gone on to federal cabinet posts. Three former Thompson administration officials were on the Republican ticket this fall, led by Edgar, who left the legislature in 1979 to become the governor's top lobbyist. Comptroller candidate Susan S. Suter headed the departments of Public Aid and Rehabilitation Services for the governor, while Gregory W. Baise left Thompson's inner office to become secretary of the Department of Transportation before running for state treasurer.

 

The Thompson administration was virtually free of scandal, no small feat in a state with Illinois' checkered history, though Thompson himself came under fire for ethical blind spots. Perhaps the most embarrassing revelations occurred in 1982, when newspaper accounts detailed how Thompson accepted costly gifts, such as South African gold coins, art work and cash, from people with state government interests.

 

More troublesome for many as the administration grew older was the creeping growth of pinstripe patronage, a catchy phrase for the no-bid consulting contracts, legal work, bond business, office leases and low-interest loans channeled with distressing regularity to insiders with ties to the governor. Defending the practice in an interview, the governor said: "I don't think any press account of pinstripe patronage has ever pointed to an abuse of the process or has ever documented a case where the state got less than first-class service from its lawyers or its bond houses."

 

On the other hand, a 5-4 majority of the U.S. Supreme Court held Thompson's handling of what might be called "blue-collar" patronage � the conventional doling out of state jobs to party faithful � violated the U.S. Constitution. The court ruling affirmed what critics said all along: The hiring freezes Thompson imposed, more or less continuously, throughout his tenure were merely patronage tools used to ensure that worthy Republicans got available state jobs.

 

Early on, party leaders complained that Thompson was not grateful enough to those who labored in the GOP vineyards. "There is no patronage," chaffed one Republican during Thompson's first term. "He's got all those former assistant U.S. attorneys he brought with him who think patronage is a dirty word, illegal and immoral." Recalling such sentiments, Thompson mused: "It came as some irony that at the end of my administration, after all this, the Supreme Court of the United States certifies what these Republican chairmen refused to believe all along � that I had the best patronage machine in the nation, that it was a Republican machine."

 

As the curtain falls on the state's longest-running administration and Big Jim Thompson strides out of the spotlight at least for the moment � how does his public rate his performance? Forty-eight percent of Illinois residents approve of his handling of the job, while 43 percent say he will go down in history as above average or outstanding, according to a Chicago Sun-Times poll taken last September. Perhaps it's fitting that the final word on Thompson come from his No. 1 nemesis for much of his record-setting tenure. "In politics, the ultimate test is whether or not you won the last election," observed House Speaker Madigan when the governor announced his decision to forego a try for a fifth term, "and so he leaves the office a complete winner. "

 

Charles N. Wheeler has been a reporter in the Chicago Sun-Times Statehouse bureau during all of the Thompson administration.

16/December 1990/Illinois Issues

 
 
  
 
 
 

Jim Thompson's Winston & Strawn Departure: What's Going on Here?


Former Illinois Governor Jim Thompson just resigned as chairman of Chicago legal powerhouse Winston & Strawn, after 13 years at the helm. Here's what he had to say about his departure:

Thompson, 70, described the move as a natural transfer of power to younger lawyers. He noted that the firm had amended its rules twice so he could remain chairman beyond the mandatory retirement age of 65.

"I was supposed to step down as chairman five years ago," Thompson said. "It's time for the next generation -- which is exactly what I said when I stepped down as governor."

But perhaps there's more to this than meets the eye. Thompson was brought in as a rainmaker -- and rewarded with a salary in excess of $1 million. But then things went south:

In recent years Thompson’s patina as a rainmaker lost a bit of shine. As a board member of Hollinger International, Conrad Black’s former publishing empire, Thompson faced lawsuits and a Wells Notice from the SEC. He left the board earlier this year, but an unnamed source reportedly said to the Sun-Times: “He became an issue.”

He also came under some criticism — from both inside and outside his firm — for Winston & Strawn’s pro-bono defense of former Illinois governor George Ryan, who was indicted on corruption charges. The firm reportedly spent an estimated $20 million on Ryan’s defense.

The case didn't end well: Ryan was convicted, and The American Lawyer refused to count the thousands of hours spent on the case as "pro bono" work. Wow -- that's one expensive lapse of judgment.

 
 
 
 
 
 
December 16, 2002: Members of 9/11 Commission Have Potential Conflicts of Interest

 

The ten members of the new 9/11 Commission are appointed by this date, and are: Republicans Thomas Kean (Chairman), Slade Gorton, James Thompson, Fred Fielding, and John Lehman, and Democrats Lee Hamilton (Vice Chairman), Max Cleland, Tim Roemer, Richard Ben-Veniste, and Jamie Gorelick. [Chicago Tribune, 12/12/2002; Associated Press, 12/16/2002; New York Times, 12/17/2002]

 

Senators Richard Shelby (R) and John McCain (R) had a say in the choice of one of the Republican positions. They and many 9/11 victims’ relatives wanted former Senator Warren Rudman (R), who cowrote an acclaimed report about terrorism before 9/11. But Senate Republican leader Trent Lott blocks Rudman’s appointment and chooses John Lehman instead. [St. Petersburg Times, 12/12/2002; Associated Press, 12/13/2002; Reuters, 12/16/2002]

 

Senators Richard Shelby (R) and John McCain (R) had a say in the choice of one of the Republican positions. They and many 9/11 victims’ relatives wanted former Senator Warren Rudman (R), who cowrote an acclaimed report about terrorism before 9/11. But Senate Republican leader Trent Lott blocks Rudman’s appointment and chooses John Lehman instead. [St. Petersburg Times, 12/12/2002; Associated Press, 12/13/2002; Reuters, 12/16/2002]

 

It slowly emerges over the next several months that at least six of the ten commissioners have ties to the airline industry. [CBS News, 3/5/2003] Henry Kissinger (see December 13, 2002) and his replacement Thomas Kean (see December 16, 2002) both caused controversy when they were named. In addition, the other nine members of the commission are later shown to all have potential conflicts of interest.

Republican commissioners:


Fred Fielding also works for a law firm lobbying for Spirit Airlines and United Airlines. [Associated Press, 2/14/2003; CBS News, 3/5/2003]


Slade Gorton has close ties to Boeing, which built all the planes destroyed on 9/11, and his law firm represents several major airlines, including Delta Airlines. [Associated Press, 12/12/2002; CBS News, 3/5/2003]


John Lehman, former secretary of the Navy, has large investments in Ball Corp., which has many US military contracts. [Associated Press, 3/27/2003]


James Thompson, former Illinois governor, is the head of a law firm that lobbies for American Airlines, and he has previously represented United Airlines. [Associated Press, 1/31/2003; CBS News, 3/5/2003]

 

Democratic commissioners:


Richard Ben-Veniste represents Boeing and United Airlines. [CBS News, 3/5/2003] Ben-Veniste also has other curious connections, according to a 2001 book on CIA ties to drug running written by Daniel Hopsicker, which has an entire chapter called “Who is Richard Ben-Veniste?” Lawyer Ben-Veniste, Hopsicker says, “has made a career of defending political crooks, specializing in cases that involve drugs and politics.” Ben-Veniste has been referred to in print as a “Mob lawyer,” and was a long-time lawyer for Barry Seal, one of the most famous drug dealers in US history who also is alleged to have had CIA connections. [Hopsicker, 2001, pp. 325-30]


Max Cleland, former US senator, has received $300,000 from the airline industry. [CBS News, 3/5/2003]


James Gorelick is a director of United Technologies, one of the Pentagon’s biggest defense contractors and a supplier of engines to airline manufacturers. [Associated Press, 3/27/2003]


Lee Hamilton sits on many advisory boards, including those to the CIA, the president’s Homeland Security Advisory Council, and the US Army. [Associated Press, 3/27/2003]


Tim Roemer represents Boeing and Lockheed Martin.[CBS News, 3/5/2003]

 

 

 

 

2003: 9/11 Commissioner Becomes Involved in Fraud Scandal, Has Little Time for Commission

 

Republican 9/11 Commissioner Jim Thompson becomes involved in a scandal surrounding the Canadian media tycoon Conrad Black. Black is accused by shareholders and then the US Justice Department of appropriating money—tens of millions of dollars—that should have gone to shareholders for his own use, and of spending it on parties, private jets, and luxury homes. Thompson gets involved in the scandal because he was a director of Black’s company, Hollinger International, and also the chairman of the audit committee there, meaning that Thompson’s role is of great interest to prosecutors. Thompson spends a lot of time trying to extricate himself from the scandal and, according to author Philip Shenon, he “all but disappear[s] from the commission during the first year of the investigation.” This has a bad effect on the commission’s relations with Republicans in the House of Representatives, as Thompson is supposed to function as an unofficial liaison to them. As House Republicans have nobody on the commission who talks to them, they begin to attack it, in particular in April 2004 (see April 13-April 29, 2004). [Shenon, 2008, pp. 91-92]

 

It slowly emerges over the next several months that at least six of the ten commissioners have ties to the airline industry. [CBS News, 3/5/2003] Henry Kissinger (see December 13, 2002) and his replacement Thomas Kean (see December 16, 2002) both caused controversy when they were named. In addition, the other nine members of the commission are later shown to all have potential conflicts of interest.

 

Republican commissioners:

 

Fred Fielding also works for a law firm lobbying for Spirit Airlines and United Airlines. [Associated Press, 2/14/2003; CBS News, 3/5/2003]

Slade Gorton has close ties to Boeing, which built all the planes destroyed on 9/11, and his law firm represents several major airlines, including Delta Airlines. [Associated Press, 12/12/2002; CBS News, 3/5/2003]

 

John Lehman, former secretary of the Navy, has large investments in Ball Corp., which has many US military contracts. [Associated Press, 3/27/2003]

 

James Thompson, former Illinois governor, is the head of a law firm that lobbies for American Airlines, and he has previously represented United Airlines. [Associated Press, 1/31/2003; CBS News, 3/5/2003]

 

Democratic commissioners:

 

Richard Ben-Veniste represents Boeing and United Airlines. [CBS News, 3/5/2003] Ben-Veniste also has other curious connections, according to a 2001 book on CIA ties to drug running written by Daniel Hopsicker, which has an entire chapter called “Who is Richard Ben-Veniste?” Lawyer Ben-Veniste, Hopsicker says, “has made a career of defending political crooks, specializing in cases that involve drugs and politics.” Ben-Veniste has been referred to in print as a “Mob lawyer,” and was a long-time lawyer for Barry Seal, one of the most famous drug dealers in US history who also is alleged to have had CIA connections. [Hopsicker, 2001, pp. 325-30]

 

Max Cleland, former US senator, has received $300,000 from the airline industry. [CBS News, 3/5/2003]

 

James Gorelick is a director of United Technologies, one of the Pentagon’s biggest defense contractors and a supplier of engines to airline manufacturers. [Associated Press, 3/27/2003]

 

Lee Hamilton sits on many advisory boards, including those to the CIA, the president’s Homeland Security Advisory Council, and the US Army. [Associated Press, 3/27/2003]

 

Tim Roemer represents Boeing and Lockheed Martin.[CBS News, 3/5/2003]

 

 

 

 

 

Ex-Governor to Look Into Union Stock Deal

 

New York Times - May 1, 2002

Editorial comment By STEVEN GREENHOUSE

 

The board of Ullico, a union-owned insurance company, has named James R. Thompson, the former Illinois governor, to investigate the private sale of company stock that resulted in big profits for its directors.

 

 
James (Pin Stripe Patronage King) Thompson is managing partner of Winston & Strawn, the firm that served as defense counsel to mobster John Serpico in his disciplinary hearing and the firm that challenged the legitimacy of LIUNA's self-reform program. (Serpico vs Laborers International)
 
After a stormy meeting that ended late Monday in Washington, the directors unanimously voted to have Mr. Thompson review the sales, which have badly embarrassed the labor movement and the presidents of several prominent unions.
 
A federal grand jury in Washington is investigating whether Ullico's sale and subsequent repurchase of its stock enabled several union presidents on its board to enrich themselves improperly at the expense of labor unions, which are the company's chief shareholders.
 
According to Ullico's proxy statements, several board members made hundreds of thousands of dollars in profits by buying shares from the company in private trades and then selling them back at a far higher price that was set by the company.
 
Ullico's officials allowed the union presidents to sell the stock at the far-higher price even when company officials knew from financial results that they would soon set the stock price far lower. The proxy statements indicate that all told the board members made more than $6 million in profits. Among those who profited were the presidents of the plumbers and carpenters unions and the former president of the iron workers.
 
The sales were reported by The Wall Street Journal last month.
 
Ullico's chairman and chief executive, Robert A. Georgine, sold 16,868 shares last year, according to a proxy released last week, and those sales could have made him more than $2 million in profit.
 
John Rodgers, a Ullico spokesman, said Mr. Georgine, who used to head the A.F.L.-C.I.O.'s building trades department, would not comment because of the grand jury investigation.
 
Mr. Thompson, a former United States attorney in Chicago, said he would hire more than half a dozen lawyers to help with the investigation. He made clear that he would follow the board's instructions.
 
"I'll do the investigation that they've asked me to do," he said. "I'll ask the questions they want me to get answered. Then I'll give them a report, and it's up to them."
 
John J. Sweeney, the A.F.L.-C.I.O's president, sits on the Ullico board and has held his Ullico stock when many other board members were selling it at a large profit. On March 21, Mr. Sweeney wrote to Mr. Georgine demanding that Ullico appoint an outsider of stature to investigate the sale-and-repurchase program.
 
"Ullico must live up to the standards we ask others to meet," Mr. Sweeney wrote.
 
Several union officials said the major debate at the board meeting was whether Mr. Thompson would be independent enough and whether the board might not act on a highly critical report.
 
The American Federation of Labor established Ullico in 1925 because union members often could not afford life or health insurance or knew little about how to obtain it.
 
The labor movement has always maintained control of Ullico, the parent of Union Labor Life Insurance, because the company allows only unions, officers and directors to purchase its stock. Traditionally, Ullico's board sets the company's stock price once a year on the recommendation of its auditors.
 
For decades, Ullico's stock price was set at $25, but the stock price soared after Ullico became one of the original investors in Global Crossing, investing $7.6 million. When Global Crossing shares were at their peak, Ullico's holdings were worth $2.1 billion, almost a dozen times Ullico's value when the company purchased the Global stock two years earlier.
 
In December 1999, Mr. Georgine sent a confidential letter to board members inviting them to buy up to 4,000 Ullico shares at $53.94, the stock price at the time. When he sent that invitation, it seemed inevitable, thanks to the boom in Global Crossing stock, that the company's auditors, PricewaterhouseCoopers, would recommend a far higher stock price the next year.
 
In May 2000, Ullico's board, acting on its auditor's recommendation, approved a share price of $146, even though Global Crossing shares had fallen nearly 50 percent from their 1999 peak.
 
In November 2000, Ullico's board approved a $30 million stock repurchase at $146 a share. While board members were allowed to sell all of their shares back to the company, the unions that were shareholders were allowed to sell back only a fraction of their shares.
 
In May 2001, Ullico's share price was set at $74, largely because of the drop in Global Crossing shares 
While Conrad Black and his co-defendants face possible prison time, former Illinois Gov. James Thompson has something to lose in the media mogul's fraud and racketeering trial, too.
 
Mr. Thompson's reputation is on the line in the case, which opened in a blaze of media coverage last week in the same Chicago courthouse where he made his name as a fraud-busting federal prosecutor 35 years ago. As chairman of the audit and compensation committees of Hollinger International Inc., Mr. Thompson was supposed to be minding the store when Mr. Black and other execs were allegedly siphoning off $84 million from the Chicago Sun-Times' parent company
 
 
 
Vincent A. Toolen was picked by Thompson late In 1978 to be director of the Department of Administrative Services (DAS), which runs the state's purchasing operation with 860 employees and a budget this year of more than $110 million. Thompson sought  Toolen's resignation last week on the heels of a Jackson County grand Jury Indictment charging Toolen with one count of perjury, one count of official misconduct and two counts of obstructing justice.
THE CHARGES stem from a lengthy investigation into alleged jobselling and the theft of auto parts at the DAS garage in Carbondale. Three former DAS employees, a former Department of Transportation worker and a southern Illinois auto supply store owner have pleaded innocent to criminal charges issued earlier in the investigation.
 
Thompson decided not to wait for the outcome of a trial before requesting his resignation. A Thompson aide later said Toolen was removed from office because he showed "a conduct that was inconsistent with being a member of the Thompson cabinet.
 
 
 
 
THE THOMPSON FAMILY
James Thompson is a member of the Trilateral Commission, as is former J&J CEO James Burke.
James Thompson says bribery will be around "as long as man is on the face of the earth."
Thompson, in his fourth year as Governor, sought greater control of Illinois politics and the state's piggy bank; for himself and for the family. To control the political and financial machinery of Illinois, Thompson would need to put associates loyal to the family in key positions at all levels of Illinois government and on all important committees. In 1980, Thompson unilaterally implemented an executive order that dramatically increased his power over Illinois politics and finances.
On November 12 1980, Thompson, by his executive order, instituted a hiring freeze for all state agencies, boards, bureaus, and commissions under his control as governor. The order affected approximately 60,000 state positions. These positions could only be filled if the candidates were first approved by an office created by Thompson, the Governor's Office of Personnel. The practice essentially consisted of denying the hiring of persons not affiliated with the Republican Party by conducting inquiries into past Republican Party affiliation and possible future pledges of loyalty.
Thompson also sought to control the media, which he did with great success during the 1982 Tylenol murders investigation. Thomson was so succesful in gaining loyalty from his friends in the media that upon leaving the Governors mansion he was appointed to the board of directors at Hollinger International, the media conglomerate and owner of The Chicago Sun Times, founded by Conrad Black.
Thompson was the chairman of Hollinger International's Audit Committee during the 7-year period when top executives siphoned off more than $400 million from the company, Conrad Black looted $84 Million, and top executives were charged with fraud involving the sale of $2.1 Billion of its newspaper subsidiaries.
Thompson, the man responsible for ensuring the company's financial records were accurate and that the company complied with SEC regulations, testified in court that when he reviewed the company's financials, he only skimmed Holinger's financial statements.
Governor Thompson and his "made" U.S. Attorneys, political fixers, and associates set themselves up during Thompson's 14-year reign as governor to profit from three industries that were big moneymakers for the Outfit; Construction, Managed Health Care, and Gambling.
After Thompson signed into law a bill that authorized riverboat gambling, the state handed out 10 riverboat gambling licenses and members of the "Thompson family" were placed in key position with oversight responsibility for Casinos and Riverboats.
The gambling houses and street games that were controlled by the outfit, rapidly lost business to the growing "legitimate" gambling houses and riverboats licensed by the state of Illinois.
 

FAHNER SHUNNED politics until he was appointed attorney general in July 1980 by Gov. James Thompson to succeed the former Republican attorney general, William Scott, sentenced to prison after his conviction for federal income tax evasion.

The attorney general's relationship with Thompson goes back to 1971, when Thompson, then U.S. attorney in Chicago, hired Fahner as an assistant U.S. attorney. Fahner also served Thompson as state law enforcement director from 1977 to 1979, where he reorganized the agency.

George Ryan

 
THOMPSON FAMILY ASSOCIATE - WILLIAM CELLINI
William Cellini entered politics when he was was elected Springfield's commissioner of streets and public improvements. By age 35 he became transportation czar in Governor Richard Ogilvie's Cabinet. After leaving state government, he became an influential fundraiser and powerful lobbyist who headed up the Illinois Asphalt Pavement Association.
During Thompson's administration, Cellini won State contracts worth tens of millions of dollars, and received sweetheart loans that were funded by the state.
 

Easy Money

Cellini developed and leased six major office buildings to the state starting in 1979, becoming one of state government's biggest landlords. At one point, the state paid $10 million a year to lease Cellini's buildings.

In 1982 Governor Thompson and state Treasurer Jerome Cosentino offered a state loan program under the auspices of a real estate investment plan. $118 million was given to 18 hotels, offices and shopping centers just before Thompson's November re-election. The loans were made to politically connected developers.

Cellini, through his President Lincoln Hotel Corporation, borrowed $15 million from the State loan program to build a luxury hotel in downtown Springfield. No individual was supposed to receive more than one loan from the state program, but Cellini was a partner in another group that received $18.2 million from the program to build a new office building.
Almost immediately, Cellini fell behind on payments for his Springfield hotel loan. Thompson and Cosentino renegotiated with Cellini in 1988 and cut the interest rate on the debt. The deal was renegotiated again in 1990 resulting in what the state treasurer in 2007, Alexi Giannoulias, would call "one of the worst deals the state has ever agreed to." The loan languished unpaid for 25 years, and in 2007 was declared to be in default.
- Cosentino pleaded guilty in 1992 to one count of bank fraud. Consentino admitted kiting millions of dollars in checks between accounts at Cosmopolitan National Bank and Cole Taylor Drovers Bank for his trucking company, Fast Motor Service Inc. The scheme to create phony balances in company checking accounts, which lasted a year during his second term as state treasurer, left Cosmopolitan holding the bag for $1.3 million in overdrafts.
Gambling
In 1990, one year before leaving office, Thompson signed into law a bill that authorized riverboat gambling; setting the stage for what would become a very profitable business for the Thomson family. The state handed out 10 riverboat gambling licenses just before Thompson left office.
The Illinois Gaming Board, responsible for awarding gambling licenses and for regulatory oversight of the Casinos and Riverboats, was filled with Thompson family associates and former members of the Tylenol task force. Some Thompson associates procured executive positions in privately held gambling companies, and several of Thompson's "made" former US Attorneys went on to represent gambling entities and defend mobsters who ran into trouble because of their involvement in the industry.
By the time Thompson left office, much of the revenue previously earned in outfit controlled gambling houses and street games, had shifted to the growing "legitimate" gambling houses and riverboats licensed by the state of Illinois.
As chairman of the Argosy Gaming Company, Cellini opened the state's first riverboat casino; Alton Belle. Cellini and his partners received their casino license from the Illinois Gaming Board two months before Thompson left the governor's office. When Argosy went public in 1993, Cellini sold some of his Argosy stock for a profit of $4.9 million. In 2004, a Pennsylvania company bought Argosy, and Cellini collected an estimated $63 million for his remaining shares.
 
Managed Health Care
Cellini acted as a lobbyist for his own firms and for several clients. Sometimes he worked alone; other times he lobbied with Robert Kjellander when Kjellander was national committeeman of the Illinois Republican Party and a former patronage director for Governor Thompson. Most lobbyists try to curry favor with legislators. But Cellini said that he didn't bother with legislators. Instead, he devoted his efforts to the governor's office and state agencies.
Among Cellini's lobbying clients was Chicago HMO.
 
 
 
 
 

Cellini indicted by federal grand jury in state corruption probe

OPERATION BOARD GAMES | Feds charge political power broker William Cellini with conspiring to shake down a Hollywood producer for $1.5 million for a Blagojevich campaign fund and talking about getting U.S. Attorney Patrick Fitzgerald fired

October 31, 2008

William Cellini, one of the most powerful men in Illinois politics, was charged Thursday in what authorities said was a shakedown scheme involving Gov. Blagojevich's campaign fund, dealing another blow to the embattled governor.

 

The 73-year-old Springfield lobbyist and businessman is accused of working with convicted influence-peddler Tony Rezko and others to extort an investment firm into making a $1.5 million contribution to Blagojevich's campaign as a condition of getting state business.

 

The four-count federal indictment also alleges that Cellini "discussed the possibility" of getting U.S. Attorney Patrick Fitzgerald dumped from that post as a way to stop an investigation.

 

The grand jury that indicted Cellini is the same one investigating renovations of Blagojevich's North Side home, according to court documents. That work was done by a company run by Rezko, a former Blagojevich adviser and fund-raiser convicted in June of wide-ranging corruption involving state deals. He's now talking with prosecutors.

 

Sources said Rezko -- who hasn't finalized a deal for his cooperation -- provided information about the alleged extortion scheme.

Blagojevich has not been accused of any wrongdoing. Asked about the Cellini charges, Blagojevich spokesman Lucio Guerrero said, "The governor was not involved in the improper activities alleged in the indictment."

 

Cellini is a longtime Republican power broker and campaign fund-raiser for Republican and Democratic governors alike, including Blagojevich. Dubbed "the King of Clout" by a 1996 Chicago Sun-Times investigation, he was known as "the Pope" when it came to the sway he held with state pension investments, according to testimony at the Rezko trial.

 

In an investigation named Operation Board Games, Cellini is accused of conspiring with Rezko and Stuart Levine, then a state pension fund board member, to shake down Thomas Rosenberg, a Chicago businessman-turned-Hollywood producer of "Million Dollar Baby" who is a principal in Capri Capital, which was seeking to handle a $220 million investment for the pension board.

At the time, Cellini was working on behalf of Commonwealth Realty Advisors Inc., a real-estate asset firm that has gotten hundreds of millions of dollars of work from the state.

 

Prosecutors also accused Cellini of conspiring with Rezko in 2004 to get Fitzgerald dumped as a way to quash any investigation into their alleged wrongdoing -- allegations that surfaced at Rezko's trial.

 

Levine, a star witness against Rezko, testified that Cellini, Rezko and another Blagojevich adviser and fund-raiser, Chris Kelly, worked to shake down Rosenberg for campaign cash after learning Capri was set to land the $220 million deal. In Thursday's indictment, Kelly appears again as an unnamed and unindicted co-conspirator.

The alleged extortion attempt was first detailed by the Sun-Times in 2006.

 

Cellini was caught on secretly made tapes talking with Levine about the Rosenberg deal. In one tape played at Rezko's trial, Cellini was heard saying Blagojevich -- "the big guy" -- knew of the plot. In another, Cellini told Levine that Rosenberg had threatened to expose them. Prosecutors said Cellini and Levine backed off.

 

Rosenberg testified there was never any direct demand that he contribute to the Blagojevich campaign, but he said his $220 million deal was stalled after he refused to ante up.

"They made the consequences clear," Rosenberg testified.

 

While Rezko was convicted of other charges, the jury cleared him in the Rosenberg scheme. Cellini's lawyer, former U.S. Attorney Dan K. Webb, noted that Thursday and said Cellini "is completely innocent of these charges."

 

"A stronger version of these same allegations was presented to the Rezko jury, and the jury sent a strong message to the government -- a not guilty verdict," Webb said. "The Rezko jury returned a not guilty verdict because the allegations were not supported by any credible evidence."

 

Contributing: Chris Fusco, Maudlyne Ihejirika

 

RELATED STORIES

Who is William Cellini? Firm pressured to donate to gov? PDF: Cellini indictment Cellini: state Capitol's quiet captain of clout The King of Clout The financial empire of William Cellini Tracing Illinois Bell's big call Business crosses party lines

RELATED PDF

Statement from Cellini's attorney

PDF transcripts, audio files of recorded calls
Levine, Cellini call; May 12, 2004 (8:44 pm)

 
 
 
 
 
 
Directors at Hollinger run risk of SEC lawsuit
 
By Richard Siklos
 
Published: THURSDAY, DECEMBER 15, 2005
 
 
NEW YORK: The Securities and Exchange Commission has notified three current and former directors of Hollinger International that they might be sued for failing to spot fraud allegedly committed at the newspaper company by senior executives.
 
If the SEC does file a civil lawsuit against the three, it would be an unusual attempt to allege that independent directors were not being vigilant enough when a fraud was committed under their noses. None of the three directors received money from the payments that are the subject of the various actions against the Hollinger co-founder, Conrad Black, and his associates.
 
The notices were issued to James Thompson, Richard Burt and Marie-Josee Kravis, according to a person close to the company.
 
The three directors made up Hollinger's audit committee from 1998 to October 2003, when Kravis resigned from the board. Thompson and Burt have remained on the audit committee but are expected to step down at the company's annual meeting next month.
 
Thompson, a former governor of Illinois, is chairman of the law firm Winston & Strawn; Burt is a former U.S. ambassador to Germany; Kravis is the wife of the financier Henry Kravis and a member of the boards of Ford Motor and IAC/InterActiveCorp.
 
Thompson declined to comment, as did a spokesman for Kravis and officials at the SEC. Burt did not return a call.
 
The notices of potential civil action by the SEC were filed about a month ago and first reported by Bloomberg News. Such Wells notices are issued to a target of an investigation to give that person an opportunity to provide facts or testimony to regulators to convince them that the filing of a fraud complaint is unwarranted.
 
Black, who was Hollinger's chairman, is expected to make a second appearance in U.S. District Court in Chicago on Friday to face criminal fraud charges stemming from the financial scandal at the company. Black has pleaded not guilty, as have three other senior Hollinger executives and a Canadian company he used to control that is in receivership.
 
Black's deputy and business partner, David Radler, pleaded guilty in August to one fraud charge relating to $32 million in payments to Black and others that were not authorized by Hollinger's board. Prosecutors in the case against Black and the others have said further criminal charges may be filed.
 
The Wells notices are the latest strands in the tangled litigation surrounding Hollinger after Black's ouster from the company in early 2004. Another Hollinger director, Richard Perle, a former Pentagon adviser, received and responded to a Wells notice earlier this year, and no public action has been taken against him by the SEC. Perle served on Hollinger's executive committee with Black and Radler.
 
Black has maintained that he believed all the payments made to him - including $51.8 million that is the subject of his criminal trial - were approved by the board or its audit committee. Black chose the members of the board when he ran Hollinger, once the world's third-biggest newspaper concern.
 
Black is being sued separately by the SEC, along with Radler, over $85 million worth of payments. He, Radler and several associates are also being sued for more than $540 million by Hollinger for compensation and dividends they received from the company.
 
Black, who was born in Toronto and renounced his Canadian citizenship to take a British peerage, has maintained he is the victim of a "smear job" and has filed several lawsuits and countersuits against the company and its directors. One lawsuit is directed against Thompson, Burt and Kravis; it asserts that if Black is found liable for receiving payments that were not property authorized, the three audit committee members are culpable because they approved the payments.
 
Black's criminal defense is also likely to rely in part on pointing at the conduct of the audit committee, which an internal report by a special committee of Hollinger's board said showed an "inexplicable and nearly complete lack of initiative, diligence or independent thought."
 
The Hollinger special committee report, written under the direction of Richard Breeden, a former SEC chairman, also accused Radler and Black of "self-righteous and aggressive looting" of the company, which is based in Chicago and publishes The Chicago Sun-Times and other newspapers. It depicted Thompson, the audit committee chairman, as too trusting of Black and Radler, and saying that Burt and Kravis were too ready to go along with Thompson.
 
It also noted that neither Hollinger's outside lawyers, Torys, nor its auditor, KPMG, raised concerns to the audit committee about the payments in question. Torys, based in Toronto and New York, settled potential claims against it by Hollinger for $30 million this month, without any admission of guilt.
 
Similarly, a group of Hollinger's current and former independent directors, including the three audit committee members who received the Wells notices, agreed to settle a shareholder lawsuit against them for $50 million. That settlement is still awaiting court approvals.
 
 
 
 
 
By Brian Baxter
 
December 11, 2008
 
High-powered Winston & Strawn litigators Dan Webb and Bradley Lerman were not at Illinois Gov. Rod Blagojevich's side when he appeared at a bond hearing on Tuesday. Blagojevich instead tapped Sheldon Sorosky, a lawyer from two-partner Chicago litigation shop Kaplan & Sorosky.
 
Whither Winston & Strawn affiliate The Am Law Daily that fee disputes and a potential conflict might keep the firm on the sidelines in the latest dirty politics scandal.
 
In the past three years, campaign finance reports show that Blagojevich has paid over $2 million in legal fees to Winston & Strawn. The payments began after law enforcement authorities began closing in on a ring of fundraisers close to the governor, including former Ungaretti & Harris partner and Democratic National Committee finance chairman Joseph Cari Jr. in September 2005.
 
That month Cari pleaded guilty to attempting to extort $850,000 from a private equity firm seeking state pension fund work. Cari's lawyer, Sidley Austin litigation partner Scott Lassar, says that his client has cooperated with prosecutors and testified against Blagojevich in the trial of fellow Democratic fundraiser Antoin "Tony" Rezko. (Rezko was convicted in June on fraud and money laundering charges.)
 
Lassar, a former U.S. attorney for the Northern District of Illinois from 1997 to 2001, says he's not sure yet if Cari will be called upon to offer testimony against the governor in the investigation that unfolded yesterday. Cari is named as a government cooperator in the 76-page criminal complaint against Blagojevich and the governor's chief of staff, John Harris, released on Tuesday.
 
Prosecutors have also requested that Cari's sentencing on the extortion plea be delayed, likely because he will be called upon to testify against the governor.
 
WINSTON'S WINDFALL
 
The downfall of Cari and Rezko, along with the subsequent legal troubles of Illinois businessman Stuart Levine (a cooperator in the government's case against Rezko) and former Blagojevich chief fundraiser Christopher Kelly (indicted on tax fraud charges stemming from a gambling debt), led prosecutors to begin looking at Blagojevich.
 
Given the intrusive probes by prosecutors into Blagojevich's administration, the governor needed a firm adept at handling politically sensitive investigations. He chose Winston & Strawn, a firm led by former four-time governor of Illinois James Thompson, which represented another former Illinois governor, George Ryan Sr. in his 2006 corruption trial.
 
In 2006 alone, the firm billed Blagojevich's campaign fund — Friends of Blagojevich — for $887,534 in fees. That was followed by $965,352 in fees for 2007. The payments were disclosed as part of periodic campaign finance reports that Blagojevich filed with the state's Board of Elections.
 
The expenditures were legal, says Skadden, Arps, Slate, Meagher & Flom campaign finance expert Kenneth Gross, because they related to Blagojevich's duties as an officeholder.
 
The National Law Journal</EM> reported in May that Winston &amp; Strawn's Lerman — a former federal prosecutor who had deferred to Webb on the firm's defense of Ryan — was leading a team from the firm handling Blagojevich's legal affairs. None of the campaign finance reports filed by Blagojevich itemized the type of legal services Winston &amp; Strawn was providing for the governor.
 
Lerman told the that the firm had only "a very small team" working for Blagojevich. The paper reports that Webb, who was busy this year with four trials, including that of former Detroit mayor Kwame Kilpatrick on obstruction of justice charges in September, did not work on the Blagojevich matter. (Neither Lerman nor Webb responded to requests for comment from The Am Law Daily.)
 
But that "very small team" seems to have generated enough billables to upset folks in the governor's office. Numerous sources, who asked not to be identified, tell The Am Law Daily that there were serious fee disputes between Winston &amp; Strawn and Blagojevich. In 2007, Blagojevich's campaign fund delayed reporting certain legal expenses that it was disputing.
 
It comes as little surprise then that neither Webb nor Lerman appeared with Blagojevich at his bond hearing on Tuesday, given this history and the fact that Winston &amp; Strawn's representation of Ryan became a largely de facto pro bono endeavor that is reported to have cost the firm at least $10 million, if not double that.
 
POTENTIAL CONFLICT
 
Winston & Strawn senior chairman Thompson declined to comment on fee disputes between the firm and Blagojevich when reached by phone on Wednesday afternoon. But Thompson did confirm Webb's representation of longtime Illinois Republican fundraiser William Cellini, which might be the final nail in any coffin for a potential Winston &amp; Strawn defense of Blagojevich.
 
"Whether [Cellini is] a conflict or not, I have no idea," Thompson says. "And whether [Webb] would ever contemplate representing the governor, I have no idea, so we have no further comment."
 
One well-connected Windy City lawyer who asked not to be identified by name, says Webb's representation of Cellini is an ironclad conflict precluding any potential retention in the Blagojevich case. (Cellini was indicted on October 30 on federal corruption charges.)
 
"There's too much history there. [Cellini] fundraised for Rod, there was testimony about him in the Rezko trial, and [Cellini] could even be a potential witness," the lawyer says. "Even if Rod did retain Webb, I think it would be almost a certainty that Fitzgerald would object."
 
 
And what of Sorosky?
 
"He's not a big-time lawyer, and if you're going up against Fitzgerald and the federal government, that's exactly what you're going to need," says another lawyer who requested anonymity. "Every dollar is worth it."
 
One lawyer rumored to be a candidate for Blagojevich's defense team — Michael Monico of Chicago's Monico, Pavich &amp; Spevack — tells us that while he has been contacted by representatives of the governor, he's not sure he can take the case on because he represents Kelly, the former Blagojevich fundraiser set to go to trial early next year.
 
Like his former lieutenants who've fallen prey to federal indictments, Blagojevich's legal options are looking increasingly limited.
 
IL Appointments
 
M. B. Oglesby, as deputy director of the State of Illinois Washington, D.C., office by Gov. James Thompson, in March (see "Washington" p. 31), Oglesby, an aide to former Gov. Richard Ogilvie, has worked for the past four years as an administrative assistant to Rep. Edward Madigan
 
Ann Lousin, Chicago, as chairperson of the Illinois Civil Service Commission, by the governor, effective July 10, pending Senate confirmation. A faculty member at John Marshall Law School, Chicago, Lousin succeeded Roy Pechous,
 
Berwyn, as head of the commission and replaced John D. Foster, Chicago, as commissioner.
 
Because of her appointment Lousin also became a member of the Advisory State Impasse Resolution Panel, which went into action in June after talks between the state and the American Federation of State, County and Municipal Employees broke down. The other two members are Labor Director William director of the Office of Collective Bargaining and Eric J. Schmertz, former executive..
 
Illinois Issues
 
James R. Irving, Aurora, as chairman of the Parole and Pardon Board, by the governor, effective May 16, pending Senate confirmation. Irving, who was appointed after the death of Acting Chairman is the first black to head the board. He was superintendent of the Illinois Youth Center, Valley View and has a background in education. Former Chairman
 
Peter A. Kostos, Chicago, resigned as chairman in April but retained his position as board member.
 
Deloris Foster, Chicago, as commissioner of the Metropolitan Sanitary District by the governor, effective May 26. Foster, who succeeded Joan Anderson, present director of the Department of Education and Registration, was an administrative assistant to former Comptroller
 
 
Robert J. Harmon, Lake Forest, as director of the Illinois Housing Development Authority by the governor, effective May 16. Harmon was vice-president and executive trust officer for the Central National Bank of Chicago. He replaces who resigned to take a position with the John Nuveen company.
 
In a major reorganization of top prison personnel. Acting Corrections Director
 
 
Charles Rowe made several appointments effective June 10. Rowe himself became permanent director of the department on June 21.
 
 
 
 
 
 
 
 
 
 

502 F.2d 813

In the Matter of David T. DELLINGER et al., Defendants-Appellants.

No. 73-2107.

United States Court of Appeals, Seventh Circuit.

Heard April 22, 1974.
Decided Sept. 6, 1974, Rehearing En Banc Denied Oct. 16, 1974.

Morton Stavis, Doris Peterson, William M. Kunstler, Center for Constitutional Rights, New York City, N.Y., for defendants-appellants.

Henry F. Field, Chicago, Ill., for amicus curiae.

James R. Thompson, U.S. Atty., Gary L. Starkman, Asst. U.S. Atty., Chicago, Ill., for United States.

Before FAIRCHILD, CUMMINGS and PELL, Circuit Judges.

CUMMINGS, Circuit Judge.

1

This appeal is from the second criminal contempt adjudication resulting from incidents occurring during the celebrated 'Chicago 7' Anti-Riot Act conspiracy trial. The substantive convictions were reversed. United States v. Dellinger, 472 F.2d 340 (7th Cir. 1972), certiorari denied, 410 U.S. 970, 93 S.Ct. 1443, 35 L.Ed.2d 706. We also reversed the original contempt convictions. In re Dellinger, 461 F.2d 389 (7th Cir. 1972).

2

Pursuant to 28 U.S.C. 292, the Chief Justice of the United States thereafter designated District Judge Gignoux to try the contempt case.1 On the remand various pre-trial motions were denied. In re Dellinger, 357 F.Supp. 949 (N.D.Ill.1973). At the trial, the Government's case-in-chief consisted of the introduction of the transcript of the Anti-Riot Act trial. After the Government rested, the district court acquitted John Froines and Lee Weiner and dismissed a number of contempt specifications against the remaining defendants in an unreported memorandum opinion dated November 6, 1973. The defendants' renewed motion to dismiss was denied in the same opinion. Thereafter, the remaining defendants testified in their own behalf. In rebuttal the Government offered evidence to refute testimony of a defense witness that the 'defense camp' had been subjected to surveillance by military intelligence officers during the Anti-Riot Act trial. At the close of all the evidence, defendants Leonard Weinglass, Rennard Davis and Thomas Hayden were acquitted. Judgments of acquittal were also entered as to several of the contempt specifications against the remaining defendants. The district court found David Dellinger, Abbott Hoffman, Jerry Rubin and William Kunstler guilty of various other contempts but did not impose any fines or sentences. In re Dellinger, 370 F.Supp. 1304 (N.D.Ill.1973).

Whether Lawyer Kunstler Was Contemptuous

3

The first argument on appeal is that Kunstler's conduct described in Kunstler specification VI does not constitute contempt of court. This specification is set out at 370 F.Supp. 1337-13382 and need not be quoted herein. The matter complained of in specification VI consisted of an extended outburst from Mr. Kunstler, one of the attorneys for the defendants, after Judge Hoffman, the trial judge in the conspiracy case, refused to relieve Kunstler of his commitment to conclude his case with the testimony of an authenticating cameraman, plus certain documents. Thus Mr. Kunstler was prevented from presenting the Reverend Ralph Abernathy as a witness for the defendants.

4

We agree with Judge Gignoux that the extent and violence of Kunstler's diatribe and the bitterness and anger displayed 'constituted a vicious personal attack on the judge which could only have served to vent his spleen.' 370 F.Supp. at 1319. In no way can Kunstler's remarks be considered as merely heated legal argument and therefore non-contemptuous. Because of the extreme nature of the attack on the trial judge, the remarks of counsel created an imminent prejudice to a fair and dispassionate proceeding, thus constituting an actual and material obstruction of the judicial process. See 461 F.2d at 400. Moreover, as the trial judge found, Kunstler's conduct 'resulted in an entirely unnecessary and not insignificant delay and disruption of the proceedings' (370 F.Supp. at 1320), reinforcing his holding that there was an actual and material obstruction of the administration of justice. Before concluding with respect to this specification, it should be noted that at their close, Kunstler's remarks predictably precipitated shouts of 'right on' and applause, again satisfying obstruction standards.3 461 F.2d at 399-400.

5

Kunstlers specification VII (reproduced at 370 F.Supp. 1338-1341) is also said not to constitute contempt of court. After Judge Hoffman had ruled that Reverend Abernathy not be permitted to take the stand, he ordered defense counsel not to make any reference before the jury to the fact that defendants wanted Abernathy to testify. Kunstler replied he would not abide by such a ruling and therefore would have to be sent to jail. Despite the trial judge's order, when Dr. Abernathy arrived Kunstler said he would like to put him on the stand. Kunstler continued to mention Dr. Abernathy's name and hugged him before the jury. The facts under this specification are clearly contempt because Kunstler violated a court order. Further, he obstructed justice by putting before the jury information that had been ruled inadmissible, making it more difficult for the jurors to decide the case according to the law as interpreted by the district judge. As we previously held, lawyers are required to obey even incorrect orders; the remedy is on appeal. 461 F.2d at 398.

6

Kunstler argues that because he got away with violating it once, there was no longer an operative order prohibiting his mentioning Dr. Abernathy to the jury. In our judgment, this is frivolous. Kunstler's renewal of his motion to call Dr. Abernathy as a defense witness in the presence of the jury and his persistent arguments after being directed to stop clearly violated Judge Hoffman's orders to make no reference before the jury to the fact that he and his colleagues wanted Dr. Abernathy to testify and not to renew his motion. Since the specification quotes Judge Hoffman's orders verbatim, there could be no doubt what Kunstler was charged with violating. Therefore, we are not 'sustaining the trial court by treating the conviction as a conviction upon a charge not made.' Eaton v. City of Tulsa, 415 U.S. 697, 699, 94 S.Ct. 1228, 1230, 39 L.Ed.2d 693; see also Taylor v. Hayes, 418 U.S. 488, 94 S.Ct. 2697, 41 L.Ed.2d 897.

7

Whether Messrs. Dellinger, Hoffman and Rubin Were Contemptuous

8

The non-lawyer defendants contend that the nine specifications involving statements made by them at the Anti-Riot Act trial and the two specifications involving wearing judicial robes by Abbott Hoffman and Jerry Rubin do not constitute contempt.

9

The statements in question delayed the trial, thereby satisfying the obstruction requirement. Although in some of the specifications, one or two sentences may have been justified, each specification contained an extended colloquy not required by the circumstances. As Judge Gignoux stated with respect to Dellinger IV (reproduced at 370 F.Supp. 1327), in light of the extent of these Dellinger comments at the Anti-Riot Act trial and their offensive character, he knew or should have known that his conduct was wrongful, and his interruptions 'so disrupted the course of the proceedings that an unnecessary and not insubstantial delay ensued.' 370 F.Supp. at 1312. Similar permissible findings were made with respect to Dellinger V, VI, VII, VIII, IX and X (reproduced at 370 F.Supp. 1328-1335, 1341-1342).

10

As to Abbott Hoffman's specification VI and Jerry Rubin's specification V (reproduced at 370 F.Supp. 1344-1347), the district court was justified in concluding that these defendants' persistent interjections occasioned a substantial delay in the progress of the proceedings and constituted misbehavior in the presence of the court. 370 F.Supp. at 1314-1315.

11

Hoffman specification VII and Rubin specification VI (set out at370 F.Supp. 1347-1348) involved the wearing of judicial robes by those defendants at the February 6th morning session of the Anti-Riot Act trial. As the district court found, the Anti-Riot Act trial transcript disclosed that this conduct occasioned an entirely unnecessary and not insignificant delay in the proceedings. 370 F.Supp. at 1315. The seriousness of this misbehavior supported the district court's conclusion that the conduct constituted an actual and material obstruction of the administration of justice. See United States v. Seale, 461 F.2d 345, 369 (7th Cir. 1972).

12

Imposition of Sentence on Mr. Kunstler Was Unrequired

13

Defendant Kunstler asserts that Judge Gignoux could only acquit or dismiss the charges and not convict him without imposing a sentence. This is a misapprehension of the law. A judge trying a criminal contempt case may find violations and nevertheless impose no sanctions. See United States v. Dickinson, 465 F.2d 496, 513 (5th Cir. 1972). We see no reason why the judge must dismiss to achieve this result, though that option is open at least to the court which initiated the contempt proceedings. See United States v. Barnett, 346 F.2d 99 (5th Cir. 1965) (en banc). Whether or not we disagree with the non-sentence is immaterial, for the trial judge was within his rights in convicting but refraining from imposing punishment.

14

Kunstler attaches significance to the fact that the trier of contempt adverted to 'the potentially grave consequences of a criminal contempt conviction to a member of the bar' (370 F.Supp. at 1322). This remark simply recognized a factual possibility over which the judge had no control; it certainly does not amount to an exercise of disciplinary powers nor an invitation for disciplinary proceedings to be commenced in the New York courts. There fore, the district court did not exceed its criminal contempt power in this respect.

15

Conduct of Conspiracy Judge and Prosecutors Does Not Necessitate Reversal

16

Defendants contend that the conduct of the judge and prosecutors at the Anti-Riot Act trial requires dismissal for their contempt. We have twice rejected this contention in the Seale and Dellinger contempt cases. See 461 F.2d at 361-363, 401. Nothing in this contempt trial persuades us to alter our prior conclusion, for provocation, however shocking, is no defense to contempt.

Adequacy of Falk-type Hearing

17

Defendants urge that their motion to dismiss should have been granted under United States v. Falk, 479 F.2d 616 (7th Cir. 1973) (en banc) because the Anti-Riot Act prosecutors were not also charged with contempt. In its unreported memorandum opinion overruling defendants' motion to dismiss, the district court refused to apply Falk because defendants failed 'to support their allegation that the prosecution of the present charges amounts to a discriminatory and unconstitutional prosecution.' The court then concluded that defendants had not made a satisfactory showing that the 'United States, on behalf of the (Anti-Riot Act) court, has pursued the present prosecution for discriminatory and unconstitutional purposes.' Judge Gignoux reaffirmed these findings at the close of the evidence (Tr. 4150).

18

Defendants' reliance on Falk is misplaced. That case was remanded so that the defendant could have a hearing on his claim of selective prosecution. Here such a hearing took place when United States Attorney Thompson gave more than fifty pages of testimony on this subject. His account satisfied the district court and now us that the Government had a rational basis for prosecuting the case. No further hearing is needed.

Electronic Surveillance

19

Defendants assert that the Government's electronic surveillance of defendants and their counsel should have been disclosed to them before trial, and that there should have been an evidentiary hearing with respect to the impact of the surveillance. In the district court, the Government agreed to turn over to defendants any such material which might infringe defendants' Sixth Amendment right to counsel, any such material that might be exculpatory under Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215, and any material disclosure of which was required by Alderman v. United States, 394 U.S. 165, 89 S.Ct. 961, 22 L.Ed.2d 176. 357 F.Supp. at 957, 960, n. 14.4 Our order of May 1, 1973, in denying defendants' April 18, 1973, petition for writ of mandamus with respect to electronic surveillance, was fashioned to enforce the first two parts of this governmental undertaking. However, no such material was discovered. As the United States Attorney for the Northern District of Illinois advised Judge Gignoux and defendants on May 23, 1973:

20

'As in the past, we recognize our obligation to turn over any surveillance that can be classified as exculpatory or capable of infringing upon the sixth amendment rights of these defendants to defend against the pending contempt charges. However, we are presently unaware of any surveillance material that can be so classified.'

21

Brady v. Maryland does not entitle defendants to an adversary hearing with respect to such materials.

22

In accord with acceptable procedure,5 government counsel furnished the district court with an affidavit that there was no surveillance of defendants or their counsel during the period of their 1969 Anti-Riot Act trial. The district court and we in turn have found that the overhearings submitted in camera show no communications between defendants and their counsel during, before and since that trial. See 357 F.Supp. at 960, n. 15.

23

The Government turned over to Judge Gignoux for his in camera inspection logs of all overhearings requested by defendants' disclosure motion. See 357 F.Supp. 957, n. 12 and 960, n. 15. Subsequently, the Government turned over to the district judge additional logs in which defendants Froines' and Davis' voices were identified, after which the surveillances were cut off in accordance with the July 14, 1969 instructions of the Attorney General.6 After the oral argument before us, in accordance with our order of May 7, 1974, the Government supplied still additional logs to us for in camera inspection. These included Anti-Riot Act trial period communications of Messrs. Davis and Dellinger that had not been discovered until after the district court's judgment. Although some of the defendants were overheard in those logs, the logs have nothing to do with the Anti-Riot Act or contempt cases.

24

The district court held that Alderman v. United States, 394 U.S. 165, 89 S.Ct. 961, 22 L.Ed.2d 176, did not require an evidentiary hearing to detrmine the relevancy of the logs because the Government was relying on the transcript before Judge Hoffman to show defendants' contempts. Therefore, the Government's evidence could not have been derived from the overhearings. 357 F.Supp. at 958-960.

25

To rebut this reasoning, defendants assert that the logs might have helped in their defense of lack of intent. We have examined all the logs; none of them relates to defendants' intent. This case is therefore distinguishable from the Seale case where one of the logs 'was a link in a communication from a lawyer to Seale advising him with respect to his conduct in court.' 461 F.2d at 364. Seale could use the log on remand to show his state of mind and motivation at the time of the conduct, so that a taint hearing was necessary. 461 F.2d at 365-366. Here, on the other hand, no such overhearings occurred. Furthermore, if a log with respect to defendants' lack of intent had been uncovered, the Government was obliged to tender it to defendants in accordance with its express undertaking (357 F.Supp. at 960, n. 14), which this Court further obligated the Government to follow in our order of May 1, 1973.

26

Defendants rely on United States v. Huss, 482 F.2d 38 (2d Cir. 1973). There government informer Siegel had been overheard illegally by the United States on six different occasions. When the Government attempted to use Siegel as a witness at the criminal trial of two others, he refused to testify despite an immunity grant. He successfully relied on the Second Circuit rule that the Government cannot rely on testimony of a witness discovered through illegal taps. The civil contempt order entered against him was vacated because the Government's destruction of the tapes of his overheard conversation prevented disclosure and an Alderman hearing. No comparable situation is presented here where these defendants were tried for their misconduct in open court rather than for any refusal to testify. Here the Government is not relying on possibly tainted evidence, so that Huss is inapt.

27

Defendants have relied on Dellinger v. Mitchell, Civil Action No. 1768-69 (D.D.C.) and their in camera disclosures to us growing out of that pending case to buttress their electronic surveillance arguments. Our review of that material and of Mr. Kunstler's affidavit concerning United States v. Means, 374 F.Supp. 321 (D.S.D.) and Judge Nichol's opinion denying defendants' motion to dismiss therein7 do not persuade us that the Government has misrepresented the status of the wiretaps here. Nothing in any of the wiretaps supports defendants' assertion that the Government thereby molded its approaches to create a picture of disruption by defendants at the Anti-Riot Act trial. In no sense can the transcript of that trial be considered the fruit of any illegal surveillance.

28

As the district court held, the limited nature of the evidence offered by the Government 'precludes the possibility that it could be inadmissible because the product of any illegal interception.' 357 F.Supp. at 961. Since the evidence offered did not and could not have come from any electronic surveillance, disclosure of the electronic surveillance records to defendants and an Alderman hearing were unnecessary.

29

Quashing the Subpoenas to the Army and the Federal Bureau of Investigation

30

In an attempt to show that the Government had harassed the defense during the Anti-Riot Act trial, defendants introduced the testimony of John O'Brien, a former military intelligence agent. We have reviewed that testimony and are satisfied that Judge Gignoux could reasonably conclude, as he did, that Mr. O'Brien's testimony should be rejected as 'utterly incredible.'

31

In order to attempt to corroborate O'Brien, the defendants served subpoenas on Brigadier General Patton, Deputy Chief of Military Intelligence of the Army, and on Richard G. Held, the Agent in Charge of the FBI's Chicago office. In general, these subpoenas called for all of O'Brien's reports from March 1969 to March 1970 as well as reports of others possibly engaged in surveillance of defendants and their counsel. The FBI filed an affidavit that none of the subpoenaed reports could be found in its search. A similar certificate was filed by the Army. However, both agencies submitted documents in camera to Judge Gignoux. After examining the documents, the district court concluded that 'the submissions both submitted by the Federal Bureau of Investigation and by the Pentagon contained no reports, records or other material which in any way related to any surveillance of the defendants or their counsel during the period March, 1969, to March, 1970, or which in any way are material or relevant to any of the issues before the Court in the present proceeding' (Tr. 4156). The Government's motions to quash the subpoenas were therefore granted.

32

In view of the court's finding that none of the submitted material was relevant or material, it was permissible to quash the subpoenas. See United States v. Escobedo, 430 F.2d 603, 610, n. 7 (7th Cir. 1970); 2 Orfield, Criminal Procedure under the Federal Rules 17:82 at 666 (1966). The district court also refused to grant the defendants' motion for an order compelling General Patton and Mr. Held to testify. Because of the affidavits of the records custodians that the desired search had been made, there was no necessity to receive testimony from them. In fact, Rule 27 of the Federal Rules of Criminal Procedure was designed to obviate such testimony.8 United States v. Rogers, 454 F.2d 601, 605 (7th Cir. 1971). Furthermore, the refusal to compel testimony from General Patton and Mr. Held was supported by the court's finding that defendants had not made the requisite 'showing of illegal surveillance or infiltration of the defense camp.'

33

Since the district court found on the basis of the entire record beyond a reasonable doubt that 'there was no surveillance, infiltration or intrusions into the councils * * * of the defense during the period of these (Anti-Riot Act) proceedings; that is between March of 1969 and March of 1970' (Tr. 4153), we conclude that its rulings as to the subpoenas and the custodians of the documents were correct.

Right to a Jury Trial

34

Defendants have renewed their contention that they were entitled to a jury trial. At a pretrial conference the district judge granted the Government's motion to limit the maximum sentence imposable against each defendant to 177 days' imprisonment. See 357 F.Supp. at 955. Since this meant that no defendant would serve more than six months' imprisonment, a jury trial was unnecessary in accordance with our holding on the prior contempt appeal. 461 F.2d at 397; see also Taylor v. Hayes, 418 U.S. 488, 94 S.Ct. 2697, 41 L.Ed.2d 897; Codispoti v. Pennsylvania, 418 U.S. 506, 94 S.Ct. 2687, 41 L.Ed.2d 912; United States v. Seale, 461 F.2d 345, 356 (7th Cir. 1972).

35

Defendants insist that they were entitled to a jury trial as a matter of discretion even if not as a matter of right. For the reasons articulated by Judge Gignoux (357 F.Supp. at 956), there was no abuse of discretion in declining to order a jury trial.

36

The Convictions Need Not Be Set Aside to Insure the Appearance of Justice

37

The defendants' final point is that the entire record of this case indicates that the judgment below must be reversed to preserve the appearance of justice. We cannot agree.

38

Upon remand, the appearance of justice was fully satisfied. First of all, the Chief Justice appointed a fair-minded judge from another jurisdiction who had nothing to do with the original contempt adjudications or the conspiracy trial. When we reversed the original contempt convictions, we deemed eighteen of the original contempt specifications and part of another to be legally insufficient. 461 F.2d at 400-401. This left 141 of the specifications for possible trial. However, the Government dismissed 89 of those unilaterally, leaving only 52 of the remanded contempt charges for trial. 370 F.Supp. at 1307. At the conclusion of the Government's case, the court dismissed two of the specifications and acquitted the defendants of 24, so that only 26 specifications remained. Idem. At the completion of the trial, defendants were found not guilty of thirteen specifications. 370 F.Supp. at 1323. Thereafter the present defendants were found guilty of the charges in only thirteen specifications. 370 F.Supp. at 1323-1324. This drastic winnowing process surely demonstrates the dispassionate nature of the trial.

39

Having reviewed the record herein, we conclude that defendants received sufficient procedural fairness to satisfy the appearance of justice. To insure continuing respect for the judicial system, it was necessary to try the defendants for the overwhelming misconduct they demonstrated at the conspiracy trial. In not imposing fines or sentences, the district judge gave weight to the various factors that defendants have urged in favor of dismissal.

40

The contempt convictions are affirmed.

41

FAIRCHILD, Circuit Judge (concurring).

42

I concur in the opinion, including affirmance of the finding on Kunstler specification VI. I do find it necessary, however, to recognize the difficulty in determining objectively that the conduct involved in this specification amounted to an actual obstruction of justice. It seems to me that in applying and preserving the federal rule that disrespect is not punishable contempt unless the conduct amounts to an actual obstruction of justice (cases cited, United States v. Seale, 461 F.2d 345, 369 (7th Cir. 1972)) we are willing to presume or infer the existence of obstruction where the conduct appears to us extremely inappropriate, indeed outrageous, and shocking.