Blagojevich Ex-Aide Tells Jury of Plot to Make Money From Official Posts

Ex-Illinois Governor Rod Blagojevich, on the first day of witnesses at his Chicago corruption trial, was confronted with the testimony of his former chief of staff, who told of a plot to profit from their positions.

“We didn’t want anyone to know what was going on,” Alonzo “Lon” Monk testified yesterday, adding that payments to him and Blagojevich were to be delayed until the governor was out of office. “In all likelihood it was wrong and breaking the law.”

Monk, 51, graduated in 1983 with the governor from Pepperdine University law school in Malibu, California, where they were roommates. He raised money for Blagojevich’s 2002 election campaign and served two years as his chief of staff.

Indicted with the governor, Monk pleaded guilty in April to conspiracy to solicit a bribe, admitting in an agreement with prosecutors that he sought a $100,000 campaign contribution in exchange for the governor’s signature on specific legislation.

Blagojevich is accused of using the power of his office to benefit him and a select group of insiders including Monk, Assistant U.S. Attorney Carrie Hamilton told the panel of 12 jurors and six alternates in her opening remarks on June 8 in federal court.

The ex-governor, 53, is on trial with his brother Robert, 55. Both men have said they’re innocent of the charges. An attorney for the governor, Sam Adam Jr., told reporters after court recessed yesterday that he wouldn’t comment on Monk’s statements until his testimony was completed.

Adam said he believed Monk’s direct testimony will continue through today and into June 14 before he can begin his cross- examination. The trial is in recess on Fridays.

Rezko’s Conviction

The money-making plot was first discussed in 2003 at the office of Antoin “Tony” Rezko, a Blagojevich fundraiser, Monk said.

Monk said Rezko told him, Blagojevich and fundraiser Christopher Kelly that they could make “hundreds of thousands of dollars,” though eight or nine different schemes. Rezko was convicted of fraud in 2008.

The plot called for Rezko, who held no official government position, to receive the money, according to Monk. Rezko would then deposit it in “a separate account that would be difficult to locate,” Monk said.

Kelly, the owner of a roofing business, had been indicted three times by the U.S. -- once with Blagojevich -- and died of an apparent drug overdose last year, according to a coroner’s report.

Pension Bonds

Monk recounted for prosecutor Christopher Niewoehner how he joined Blagojevich’s campaign in 2002 without prior fundraising experience and, working with donation bundlers, brought in about $7.5 million in the first half of the next year.

He also told jurors about the state’s 2003 sale of $10 billion in pension obligation bonds through the securities firm Bear Stearns Cos., now part of JPMorgan Chase & Co. The goal of the sale was to refinance state debt at a lower rate of interest, Monk testified.

Kelly and Rezko recommended that the state make the sale through Bear Stearns, Monk said, after which the firm’s lobbyist paid Rezko $500,000. The decision to select a firm to sell the state’s bonds belonged to Blagojevich, Monk testified.

Monk said he didn’t know Rezko would keep the money and that he received no part of it. He identified the lobbyist as Robert Kjellander, principal of Springfield Consulting Group LLC, located in the state’s capital city.

Kjellander didn’t immediately return a call seeking comment on yesterday’s testimony.

FBI’s Probe

The jury also heard testimony yesterday by Federal Bureau of Investigation agent Daniel Cain, who signed the original 76- page criminal complaint against Blagojevich when he was arrested in December 2008.

The investigation, according to Cain, dated back to 2003 when the FBI first received information about alleged improprieties by Stuart Levine, who was then serving as a member of two state boards.

Levine pleaded guilty to fraud in 2006 and is cooperating with prosecutors. The FBI, acting on information from Levine and a 2008 tip from former Blagojevich aide John Wyma, expanded its probe into the governor’s office and obtained a court order authorizing wiretaps, Cain said.

Investigators overheard more than 5,000 conversations in the Blagojevich campaign office, on his home phone, on his brother’s mobile phone and later on mobile phones used by Monk and another chief of staff, John Harris, Cain said.

Some of those recordings were “minimized,” to avoid intrusion on privileged conversations with the governor’s lawyer, Cain told defense attorney Aaron Goldstein on cross- examination.

The case is U.S. v. Blagojevich, 08-cr-00888, U.S. District Court, Northern District of Illinois (Chicago).

To contact the reporter on this story: Andrew M. Harris in Chicago at aharris16@bloomberg.net.

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