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Inside the Rod Blagojevich investigation and related cases

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Tony Rezko dished out insider details on Illinois corruption. But prosecutors still want the onetime friend to Barack Obama to serve 11 to 15 years in prison.

Should a judge give him a break?

Rezko cooperated with federal authorities -- but not until after his 2008 conviction on 16 of 24 counts of corruption under Blagojevich's tenure as governor. Prosecutors never used Rezko as a witness in subsequent criminal cases.

It's left the once high-profile defendant, set to be sentenced on Tuesday in Chicago federal court, in a precarious position.

Rezko volunteered to go to jail immediately, volunteered to cooperate and volunteered to delay his sentencing so he could be called as a witness at both of Blagojevich's trials as well as the trial of Springfield power broker William Cellini, according to his lawyers.

Being behind bars -- but not sentenced -- meant he endured more oppressive prison conditions than most white collar criminals who are usually sentenced then shipped off to prison camps, his lawyers said.

But in the end, the government never called him to the witness stand. While Rezko's lawyers asked U.S. District Judge Amy St. Eve. to sentence him to time served, the government has requested a stiff penalty: 11 to 15 years in prison.

Prosecutors argue Rezko's cooperation wasn't that helpful, that he lied to them in debriefing sessions and that their proposed penalty would cover a second criminal case before a different judge involving loan fraud.

"Rezko's cooperation was heavily tainted by the timing of when he decided to cooperate, by his repeated lies to judges, and by his pervasive and sustained lies made to the government over the first several months of his purported cooperation with the government," prosecutors wrote in a recent filing.

Because he was in talks with federal authorities, Rezko served about nine months in the most restrictive jail conditions at the downtown Metropolitan Correctional Center -- a Special Housing Unit called the "SHU" where "high-risk" inmates -- including accused terrorists and currently, a suspected high-ranking leader of a violent Mexican drug cartel -- are held.

It's also a place where the jail houses high-profile defendants or those cooperating, under the argument that it's for their own protection.

Legal observers say a judge can credit defendants for harsher conditions -- as well as for their cooperation, even if the prosecution doesn't use the witness at trial.

"A lot of courts over the years have thought about and considered the conditions of confinement," during sentencing, defense lawyer Patrick Cotter said.

Scott Fawell, onetime chief of staff of convicted ex-Gov. George Ryan, said time in the SHU should not be shrugged off. Fawell once spent two nights there and pleaded with prison officials to allow him into general population.

"I said: 'I'll sign anything, just get me out of here,'" Fawell said in an interview. There's no TV, no card-playing, no interaction with other inmates, he said.

"You can't see outside," he said. "You have to stick your hand-cuffed hands through a slot to get food."

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In a position paper asking a judge to free him from prison now, rather than have to do more time, Tony Rezko says that
after spending 20 years in Chicago politics he was "shocked" by a request
that came from Rod Blagojevich.

"Mr. Rezko was shocked that Blagojevich explicitly directed him to work with Chris Kelly to find ways for
Blagojevich, Monk, Kelly and Rezko to make money through state action,"
Rezko's lawyers wrote in a sentencing filing.

It also says he didn't trust Stuart Levine until someone called Rezko to back Levine: Bill Cellini.

"Rezko knew Cellini was the ultimate insider during the 26 years of Republican administrations that preceded Blagojevich, and Rezko knew that Cellini had made tens if not hundreds of millions of dollars from state business during that time period. As the evidence at trial showed, Cellini was concerned about protecting his influence and the
individuals he had placed on various state boards, so he proposed an "accommodation" to the
new administration by which he agreed to raise campaign funds for Blagojevich in exchange for
the governor's agreement to protect the "status quo" by leaving board members loyal to Cellini
in place," lawyers wrote. "In short, Cellini had in place for years the apparatus that Blagojevich wanted Kelly and
Rezko to build, and Levine was practically begging to maintain and even increase his thoroughly
corrupt influence."

Rezko's sentencing is scheduled for Nov. 22.

Read more here: Rezko asks for time served.


Potential jurors in William Cellini's trial were in federal court this morning, but so far, jury selection hasn't started in the corruption case of the Downstate power broker.

Prosecutors and defense lawyers were still in chambers with U.S. District Judge James Zagel discussing issues connected to the trial, court personnel said this morning. They're expected in court at about 12:15 p.m. Make that 1:15, according to the most recent update.

Last week, lawyers went behind closed doors to talk about star witness Stuart Levine and how much leeway Zagel would give the defense in his questioning.

Levine, who has pleaded guilty to using his influence on state boards to win kickbacks, has a salty history that includes drug use and partying. Prosecutors had asked Zagel to block the defense from asking about some of those issues.

Zagel has not yet ruled on the matter.

Cellini, a onetime co-defendant of Rod Blagojevich, is accused of trying to extort a Hollywood producer who sought state business.

Longtime Blagojevich pal Lon Monk endures a sometimes tough, sometimes comical cross examination this morning, where he's getting hammered for betraying his onetime close friend and for taking cash bribes from Tony Rezko.

At first, attorney Shelly Sorosky tries weaving in some of Blagojevich's political and personal history through his questions, probing Monk about how the two first met in law school in California, how Monk was part of Blagojevich's wedding party.
"Is it fair to say you were the rich kid from southern California and he was the poor kid from the Northwest Side?" Sorosky asked. Sustained.
"Your mother wasn't a CTA ticket agent was she?"
Sustained.

Sorosky manages to get in that Mayor Daley endorsed Blagojevich in his early political years and Blagojevich won his political success without too much help of Monk.
"He was a congressman and you're still trying to hustle contracts ... right?"

Then he turned to talk of Rezko, with Sorosky trying to tie the timing of Rezko's legal woes to Monk beginning to take money from Rezko, implying that it was somehow hush money as a federal investigation ramped up against the North Shore businessman.

Monk, while Blagojevich's chief of staff, has testified he took $70,000 to $90,000 in secret cash from Rezko.
"You start receiving this cash from Mr. Rezko at the same time these controversies began?" Sorosky asked.
Monk: "They started a little bit after that."

Monk said he spent some of the cash to buy groceries.
"Did you not eat before you got this money?"
Sustained.

Monk said he went in to talk to FBI agents back in 2005 where he didn't tell them about taking cash from Rezko.
"You lied to the FBI right?" Sorosky asked.
Pause. "Yes," Monk replies.
He later was campaign manager for Blagojevich, pulling in $20,000 a month, he said.

Monk admitted he kept the cash secret from even Blagojevich.
"He wouldn't have approved of the method in which I was getting the money," Monk said.


Lawyers for convicted political fixer Tony Rezko were in court this morning arguing he should win a new trial for his 2008 conviction.

After arguments were through though, U.S. District Judge Amy St. Eve set Rezko's sentencing date for Oct. 21.

St. Eve hasn't ruled on whether Rezko's conviction should be tossed because of a 2010 U.S. Supreme Court ruling that narrowed the honest services statute used in his prosecution. St. Eve asked skeptical questions of Rezko's lawyers at Friday morning's hearing. She said she would rule at a later date.

Rezko is asking for a new trial even though he continues to cooperate with the government and is being considered as a witness for the prosecution. His lawyers have said he could testify in either Rod Blagojevich's retrial or in the trial of Springfield businessman William Cellini, which is in August.

"Nobody's going to sit where he's been sitting but for the reason he's been cooperating," defense lawyer Joseph Duffy said after court.

Rezko is being held in a Wisconsin county jail.

FBI interviewed Luis Gutierrez in 2008 about Rezko deal

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When Tony Rezko was on trial for corruption under Rod Blagojevich, the feds secretly sat down with a sitting U.S. Congressman with some questions.

The FBI queried U.S. Rep. Luis Gutierrez in the spring of 2008 about free upgrades he received on a riverfront town house he bought from Rezko. The unit cost less than his neighbors and sold for 40 percent more than for what he bought it.

Read details here: Gutierrez interview

Reporting with Natasha Korecki

With two brief witnesses, prosecutors are continuing to suggest more shady dealings between Patti Blagojevich and Tony Rezko's Rezmar Corp.

First, real estate agent Marianne Piazzi, and now FBI Special Agent Jane Ferguson, are testifying on the sales of properties owned by a Rezmar company.

They testify that Patti's real estate company, River Realty, accepted cash from Rezko without doing any work.

For the sale of a property at 1069 W. Chestnut, River Realty got more than $14,000, documents show.

In his cross-examination, defense attorney Sam Adam Jr. questioned Ferguson's knowledge of the River Realty documents, suggesting she doesn't know how old the documents are or who created them.

Defense: Patti's work for Rezmar was legitimate

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Reporting with Natasha Korecki

Defense attorney Michael Gillespie is questioning Winter on his knowledge of a business arrangement between Patti Blagojevich and convicted businessman Tony Rezko.

Gillespie: "You are not the person who negotiated the working agreement with Mrs. Blagojevich?"
Winter: "No."
Gillespie: "You have absolutely no idea about the underlying terms of that working agreement?"
Winter: "No."

Testimony last week stated that Patti pocketed a $12,000 retainer from Rezko's development company each month for doing virtually no work, and also received other checks and home repairs.

Patti could have been performing legitimate services for the company, Gillespie is arguing.

Winter is now off the stand. The government has called real estate agent Marianne Piazzi.

Reporting with Natasha Korecki

This Tuesday morning began with an announcement that Juror No. 115 -- a white woman -- has been dismissed because of a "critical illness" of a parent, Judge James Zagel said.

Michael Winter, a consultant for Tony Rezko's Rezmar Corp., is now back on the stand for his cross-examination.

Earlier, on his way into court, Rod Blagojevich passed a group of reporters. "How's the suit?" he asked.

He was referencing testimony from last week where an agent testified he spent $400,000 on fine clothing, suits, shoes, ties and even underwear.

Blagojevich trial: Day 19 and last week's recap

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Last week ended with a new revelation about the Blagojevich family: a $400,000 bill on high-end suits, designer ties, furs, shoes and even fancy underwear. The family spent more on fine clothing than on its mortgage, child care or tuition in the years Rod Blagojevich served as governor, according to testimony.
As the fourth full week of trial concluded, prosecutors revealed they may wrap up its case next week -- much sooner than they had anticipated.

Meanwhile, jurors heard Blagojevich unleash jealousy and hatred against President Obama, they heard the infamous "f------ golden" recording, and heard testimony that Blagojevich referred to Alexi Giannoulias as a "mother f-----."

Some explosive testimony from union leader Tom Balanoff indicated that Barack Obama called him one day before the 2008 presidential election to give him the green light on Valerie Jarrett for the Senate seat.

Two witnesses testified that Patti Blagojevich was paid by Tony Rezko's Rezmar for doing no work.

Up today:
1. Michael Winter, a Rezmar consultant, continues his testimony.
2. This week prosecutors are expected to put on Indian supporters to Rod Blagojevich who will testify about the ex-governor's alleged desire to extract a $1.5 million campaign donation from Jesse Jackson Jr. in exchange for a Senate seat appointment.


Reporting with Sarah Ostman

A government witness has testified that businessman Tony Rezko asked him to cut checks to the former governor's wife even though she hadn't done work for it.

Robert Williams, former chief financial officer of Rezko's Rezmar company said
she was paid $12,000 a month and it was recorded in Rezmar books as consulting.

Prosecutor Carrie Hamilton asked if Williams was aware of any consulting work Patti Blagojevich did.

Williams: "I was not."

Williams is testifying under a grant of immunity.

Williams said he'd occasionally see Patti in the offices.

"She had her children with her," he said and she usually just talked to Rezko.

"Mr. Rezko informed me we wouldn't be writing any more checks after that May, 2004 check," he said.

In January, 2004: Williams is testifying that Rezko gave him a check from Chicago Title and Trust for $40,000. Williams said Rezko told him to deposit it and then cut a check to Patti Blagojevich's River Realty company in the amount of $40,000.

Before that testimony, Williams spoke of another, $15,000 check that Rezko asked be cut for Patti Blagojevich.

In August 2003, Rezko asked Williams to figure out how they could give River Realty a check for around $15,000. Williams realized they'd recently closed on a deal (850 N Ogden LLC project) and if he tacked on a fake 2.5 percent fee on, it would make up the needed figure.

Hamilton asked Williams if he thought Patti Blagojevich had done any work for that money.

The answer was no.

Reporting with Natasha Korecki

Next on the stand is someone we've seen before -- IRS agent and numbers cruncher Shari Shindler.

With charts and graphs, she's explaining a flow of money from Tony Rezko's Rezmar Corp. to Patti Blagojevich's firm, River Realty.

Prosecutors noted that nowhere on the Blagojevich family's tax returns -- which were publicly released while Rod was governor -- is there any indication that Rezko money went to Patti.

The Blagojeviches' income peaked in 2004 at $392,392. By 2008 -- the year we hear recordings of Blagojevich angsting about his cash flow -- it's down to $226,795.

Patti has left the room for this witness, as she always does when she's the subject of testimony.

By Natasha Korecki

Doug Scofield testifies about talk of the cabinet position being discussed by Tom Balanoff and Valerie Jarrett.

Scofield said he was discussing the prospect with union member Jerry Morrison, who was skeptical.

"The president-elect and the people around the president-elect wanted to get away from Chicago politics," Scofied testified.

That set up a call where Blagojevich is heard equating Chicago politics with Tony Rezko, whose relationship with Obama had been an issue in the presidential campaign.

"She's holding hers with two hands ... sort of clinging to it. Me, I've got the whole thing wrapped around my arms," Blagojevich is heard saying about Jarrett and the Senate seat.

The courtroom grows quiet during this portion of the recording -- a snippet that had been revealed previously in government documents.

with Sarah Ostman

Rod Blagojevich's jury is looking at financial charts that appear to buttress the testimony of onetime top Blagojevich aide Lon Monk.

One chart shows a series of wire transfers from various accounts belonging to Tony Rezko. Finally, one of the accounts is drawn down the day after a $200,000 check is written to another Blagojevich associate, Christopher Kelly.

Shari Schindler a 23-year revenue agent with the IRS testified that one check for $12,000 traced back to Patti Blagojevich's account at her business, River Realty in October 3, 2003, the same day that Rezko associate Joseph Aramanda was moving money out of his account.

Schindler is tapped in all the top criminal cases here in federal court. She's known as the expert who untangles the financial mess associated with complicated cases.

Schindler said she scrutinized all of Monk's bank accounts, including his wife's. Between Sept. 2004 and 2007: "There's virtually no cash withdrawn from the banks."

"In that time could you find any deposits for Mr. Monk or his wife?" Prosecutor Reid Schar asked.

"I looked for them and I couldn't find any," Schindler said.

That supports Monk's testimony that he was taking cash payments from Rezko, up to $90,000.

Blagojevich attorney Aaron Goldstein tried offering a reason for the cash payments.
"Someone was giving him potentially hush-money," attorney Goldstein tried asking.

It apparently was such an obvious objection, there was laughter in the gallery.

Judge James Zagel slapped down some of Goldstein's attempted questions, repeatedly telling him he was going outside the scope.

He's now giving the defense yet another tutorial on what kinds of questions they're allowed to ask and what they're not allowed to ask. In general, don't start questions: "is it possible," he said.

He made comparisons to the World Cup, saying it's "possible" that England or Brazil might win. But anyone who says it's possible that Australia wins doesn't know what he's talking about.

(Personally, I'm offended Zagel didn't use Argentina as an example of a "possible" winner.)

"Before you utter the word "possible" think about that," Zagel told them.

Reporting with Sarah Ostman

Prosecution witness Joseph Aramanda just testified that Tony Rezko asked him to write a $10,000 campaign contribution check to Barack Obama.

"Isn't it true that Mr. Rezko asked you to make a check for $10,000 out to Friends of Obama?" Rod Blagojevich attorney Michael Gillespie asked.

Aramanda acknowledged the check. He gave $10,000 in campaign cash to Obama's U.S. Senate campaign on March 5, 2004, according to records.

In Rezko's criminal trial, prosecutors said Aramanda got an illegal $250,000 "finder's fee" tied to a state teacher-pension investment deal. Prosecutors also said that Aramanda did no work for the money, and that some of it was used to pay a Rezko debt.

According to prosecutors, it was a portion of that $250,000 that was routed back to Obama's campaign when he was running for U.S. Senate.

Aramanda said Rezko asked him to make the donation for him; it is a violation of campaign finance laws to make straw donations.

Obama -- who's said he had no idea at the time the Aramanda contribution was tainted in any way -- later gave the Aramanda money to charity, as well as tens of thousands of dollars more from Rezko, who was part of Obama's senatorial finance committee.

Aramanda said he remains friends with Rezko, who in 2008 was convicted of corruption under Blagojevich. Aramanda visited Rezko in jail on Jan. 4, 2009 and in February of 2009.

Gillespie is pressing Aramanda on the timing of his statements about the former governor to prosecutors. He said Aramanda's allegation about Blagojevich's involvement with Rezko in siphoning fees from TRS didn't come until after he met with Rezko in jail and after Rezko began talking to prosecutors.

"What could be more substantive than a sitting governor taking payments?" Gillespie asked, noting Aramanda hadn't specified this in one of his debriefings with the prosecution. Aramanda did not answer because the judge upheld an objection.

Gillespie asked if Aramanda heard that Rezko was cooperating back in 2009.

"I can tell you what I heard, it's not that I heard he was cooperating," Aramanda said. "Obviously if he's meeting with (prosecutors) he was talking with them. I don't know that he was cooperating with them."

"Soon after, was the first time you said to anyone this alleged statement that the governor was taking money, correct?" Gillespie asked.

Again, Aramanda couldn't respond because of an objection.

Aramanda didn't testify he knew Blagojevich took money, only that Rezko spoke of an agreement where Rezko, Blagojevich and two others would split proceeds from state deals.

Here's one other small connection between Rezko, Aramanda and Obama: Obama's Senate office hired Aramanda's son as an intern in 2005, at Rezko's urging.
Obama's camp, however, has said that Obama did not know Aramanda personally.


One of Rod Blagojevich's defense lawyers just took great pains to make sure witness Joseph Aramanda explained who else was at Tony Rezko's mansion the day he met Rod Blagojevich.

The other person: Barack Obama.

Aramanda said it was a fund-raiser for both Obama and Blagojevich.

The defense is trying to draw links here. They're trying to show that Aramanda was bamboozled by Tony Rezko -- just like Blagojevich and, they will argue, just like Obama.

Obama and Rezko were friends when Obama was an aspiring U.S. Senator. Rezko did some fund-raising for Obama and bought property next door to the Obama's Hyde Park home.

Defense lawyer Michael Gillespie said Rezko used Aramanda to funnel kickbacks.

"He made no mention he was using you as a front man to get his money," Gillespie asked.

Aramanda had testified that Rezko arranged for Aramanda to get "business loans"
through Rezko's friends. Rezko then tapped Aramanda to use portions of those "loans" to repay Rezko's debt.

Rezko also directed Aramanda to make payments on his behalf, he testified. Aramanda testified that Rezko gave him a list of names and told him the amounts he was to wire to various Rezko associates.

Not included in that list: Rod Blagojevich.

"He never gave you a wire transfer for an account in Aruba and said, this is the governor's, send it to him," Gillespie asked.
"No," Aramanda responded.

Reporting with Natasha Korecki

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Tony Rezko

A second witness -- who is on the stand under a letter of immunity -- testified that Tony Rezko told him Rod Blagojevich, while he was governor, was involved in a deal with Rezko where fees would be split between himself and his "inner circle."

Rezko proposed that Aramanda would act as an intermediary with the Teachers Retirement Systems and receive fees from TRS investments with different firms, according to court records.

Joseph Aramanda testified that Rezko invited him to be part of that business venture where his annual yearly salary would be $250,000. Aramanda said he thought that was shockingly low, given that the transactions could rake in $1 million or more per deal and there would likely be multiple deals each year.

Aramanda asked Rezko what was going to happen to the rest of the money, he testified.

The answer was that it would be split among other partners.

The big reveal: Aramanda backed up what government witness Lon Monk claimed earlier in his testimony -- that sharing in the proceeds from that proposed deal would be Rod Blagojevich, Lon Monk and Chris Kelly.

"I was uncomfortable with the situation," Aramanda said of the proposed venture. "I thought it was wrong."

Aramanda said he refused to take part in it.

Still, his testimony supports Monk, who the defense called a liar. Monk testified that Blagojevich, himself, Rezko and Kelly met secretly to map out how they would make money off of state deals with the then-governor taking action to benefit his friends.

Aramanda is a friend and former business associate of Rezko, the convicted fund-raiser. He is testifying about a 2004 deal to accept a finder's fee from Glencoe Capital, which won a $50 million investment from the state's Teachers' Retirement System.

Aramanda hadn't done any work for his fees, he testified. So when he asked Glencoe Capital's Sheldon Pekin to make the second payment in April 2004, Pekin shot back with, "What do you think, Christmas comes early?" according to Aramanda.

Prosecutors played a recording of a conversation between onetime TRS and health board member Stuart Levine and Sheldon Pekin that confirmed the Christmas comment and the tape made reference to the "other guy," getting upset about Pekin's comment. The "other guy," is a reference to Tony Rezko, according to testimony at Rezko's 2008 trial.

Pekin's comment insinuated that Aramanda was pocketing "gift" money, Aramanda testified, and he was offended by the remark.

According to Aramanda, it was Rezko who hooked up Aramanda to do work for Pekin. Of Aramanda's first $150,000 payment from Pekin, $50,000 went to Rezko, Aramanda testified.

Rezko approached Aramanda to smooth things over after the Christmas remark, and he told Aramanda he wanted him in on another investment-finding deal -- one he said "could be a really big business opportunity and could relate to multiple transactions over a number of years," Aramanda testified.

Defense attorney Michael Gillespie is now cross-examining.

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By Chris Fusco

The complicated "follow the money" chain referenced in our earlier "Who is Joe Aramanda" blog post has begun.

Aramanda is detailing how a $600,000 loan he got from Springfield lobbyist Robert Kjellander in late summer 2003 didn't go as planned.

Aramanda got the loan with help from former Blagojevich fund-raiser Tony Rezko, who is now behind bars. Prosecutors have suggested the source of funds was a fee that Kjellander got from a $10 billion state government borrowing deal.

Aramanda thought he would use the money to rebuild a pizza business which he'd bought from Rezko.

Instead, Rezko apparently forced Aramanda to use the money to settle a $475,000 debt Aramanda still owed Rezko from Aramanda's pizza franchise purchase.

Aramanda ended up paying $461,000 to people to whom Rezko owed money. He used the rest of the money to try to help his pizza restaurants stay afloat.

Then, in April, Kjellander called Aramanda wanting the one-year loan repaid early.

It was that at time, Aramanda testified, that Rezko arranged for another loan to Aramanda -- from Jay Wilton, a California developer who'd recently been awarded a deal to operate oases for the Illinois Tollway. Wilton also was a major Blagojevich campaign contributor.

Aramanda used the Wilton loan to repay Kjellander the $600,000, plus another $24,000, presumably interest.

Aramanda is now answering questions about the Teachers' Retirement System and "finder's fees" that consultants were paid in exchange for being middle men who paired up investment companies with the TRS board.

Rezko told Aramanda that he could help Aramanda get into the finder's fee business.

In Rezko's trial, it was alleged that Rezko directed a $250,000 "finder's fee" from a TRS investment to Rezko.

Assistant U.S. Attorney Chris Niewoehner seems to continue to be laying out the complicated money trail for jurors.


Reporting with Sarah Ostman

We begin again after the lunch break with a new witness, David Abel, 49, who lives on Chicago's North Side.

Blond, glasses, Abel sits very still on the witness stand. He looks every bit of the part of the number-crunching expert he was employed to be with the state.

He gives such details as "I knocked lightly on the door," when asked what he did first when he joined a ongoing meeting in the governor's office at the Thompson Center, downtown.

Abel talked about the $10 billion pension bond deal the state took part in under Rod Blagojevich.

Former Blagojevich chief of staff Lon Monk, a government witness, testified that Blagojevich, Monk, Tony Rezko and Chris Kelly plotted to split a kickback off that deal.
Monk testified that Kelly pushed Blagojevich to issue all $10 billion in bonds in one day so that the chosen firm Bear Stearns, would get all the business. Monk testified that Rezko struck a deal with Stearns, in which he'd get $500,000 off the deal. Monk testified that money was to be split four ways -- to Blagojevich, Monk, Kelly, and Rezko.

Abel testified that Kelly was in attendance in the meeting.

"Clearly it's the largest that the state has ever done. At that time it was the largest ... done by any municipality in the United States," Abel said.

"I think we have order support for the $10 billion, we have other alternatives if we're not comfortable with the full $10 billion and we could go either way," he said he advised Blagojevich and others in the meeting.

That's different than what we heard from Monk, who said he believed people in the budget office were pushing to sell all $10 billion. That gives the prosecution room to later argue that it was Kelly's alleged corrupt role that made the sale go forward, rather than professionals advocating the move.

John Filan, who headed the office of budget management, later told Abel they'd be issuing all $10 billion in bonds.

Prosecutors lay the groundwork to show a financial relationship between Patti Blagojevich and Tony Rezko.

Lon Monk said the then-governor wanted his wife to get a steady flow of income. So they asked lawyers from Winston & Strawn if it was legal for Patti Blagojevich to work at Rezmar, Rezko's company. She would sell and market real estate on retainer.

"It wasn't a problem for her to work for Rezmar so long as she was actually working for them," Monk said the lawyers told them. "His advice was, you know, make sure she's working."
That was a concern, he said, because:"She was not only the governor's wife, but she was also a stay at home mom for two little girls."

Prosecutors will later say, through other witnesses, that Patti was a ghost payroller, that she didn't actually do work but came in to Rezmar offices for show. They'll say she sometimes brought her kids to the offices with her but didn't do the work. She was paid $12,000 a month on retainer.

They'll say that Mr. and Mrs. Blagojevich flouted the advice of their attorneys.

Blagojevich Trial: "1, 2, 3, 4"

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Rod Blagojevich, Tony Rezko, Chris Kelly and Lon Monk used code names for themselves "when talking about the four of us making money," Monk said -- "1, 2, 3, 4."

Monk said in 2007 or 2008, when he and Blagojevich were alone in Blago's office, they discussed an FBI investigation.

Blagojevich told Monk not to ever talk about the "1, 2, 3, 4" reference.

Monk on the stand silently mimicked Blagojevich's actions, putting up his fingers one at a time, then running a single finger across his throat.

Blagojevich is clearly upset, unsettled in his chair. He leaned forward and stared right at Monk. But at Monk's gesture, Blagojevich sat back hard in his chair and appeared to mutter something.

He's now trying to be contained, hands folded before him.

Prosecutor Chris Niewoehner is questioning Lon Monk about appointments that Blagojevich made to a list of unpaid positions on state boards and commissions in 2003 and 2004.

Tony Rezko and Chris Kelly brought forward a list of recommendations for these at positions -- mostly people who had made sizable contributions or could be counted on to make sizable contributions, Monk testified.

They were "people who would support the governor's agenda, potentially donate money," Monk said. The appointments were a fund-raising tool, he said.

Rezko said that "some of these board spots were high-profile enough and prestigious enough ... that at a minimum some of these people ought to be donating $25,000," Monk said.

These were positions like trusteeships at the University of Illinois, the State Board of Investment, and the like, Monk said.

Blagojevich called these positions his "ambassadorships," Monk said -- referring to the notion that ambassadorships are appointed by presidents as a thank-you for big campaign contributions.

One of those most publicized appointments was that of Ali Ata, former director of the Illinois Finance Authority. Niewoehner is questioning Monk on that appointment.

Blagojevich Trial Today: Day 6 and overview

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Former Illinois Gov. Rod Blagojevich trial day 6 will feature expanded testimony from Lon Monk, who started dishing considerably against his old friend and boss during his first day on the stand Wednesday.

EXPECTED TODAY: The government could begin playing the first, much-anticipated secret FBI recordings today. Since Monk's cell phone was tapped, he'll have a bunch of calls to discuss.

MONK'S KEY POINTS FROM WEDNESDAY:

Good for prosecutors: OK, Lon Monk went on family vacations with Rod and Patti Blagojevich, he even lived with the couple when he returned to Chicago to take a job in the governor's administration back in 2002. So prosecutors made it crystal clear that Monk is close to the former governor and maybe that makes him more believable to jurors.
•Monk said he witnessed Blagojevich in meetings where the former governor agreed
he'd use his influence to help his friends -- and himself -- make money off of state deals.
•Monk says $500,000 was funneled into a secret bank account and it was to be split in four, with a share going to Rod Blagojevich after he left office.

Good for Blagojevich: Monk said he never saw a dime from the $500,000 that Tony Rezko took as a kickback payment for steering a state deal to a firm he and Kelly hand-picked. That means he didn't see Blagojevich ever dip into that money either.
"Do you know what happened to it?" Prosecutor Chris Niewoehner asked. Monk: "No."



Lon Monk's critical testimony continues as he alleges that a $10 billion state deal was controlled not by experts in Rod Blagojevich's administration -- but fund-raising friends who wanted to make money off the deal.

That's because Blagojevich, Tony Rezko, Chris Kelly and Monk were to win a $500,000 kickback off the deal, he said.

Monk told of a number of secret meetings involving the four of them. He said they referred to one another as 1,2, 3 and 4.

Monk said he listened intently when Kelly explained to him how they could profit off of state deals.

"I was intrigued and I wanted to make money," he said.

While the money was paid into a secret account held by Rezko, Monk never testified whether he knew if Blagojevich ultimately got any of the money.

Monk said in 2003, early in Blagojevich's first run in the governor's office, Blagojevich gave the OK to sell all $10 billion in bonds in one day -- rather than over several days, and by several different firms.

Handling the huge task was Bear Stearns, a firm recommended by Kelly and Rezko.
Blagojevich gave the nod to the deal only after Kelly took him aside in a government meeting and told him what to do.
Kelly was the only non-staffer present at the meeting, Monk said.

Kelly later told Monk he pushed Blagojevich to approve the deal.

"It was either really going to help fund-raising or we were going to make money ... The four of us," Monk said Kelly explained.

Monk said the $10 billion deal was steered to Bear Stearns while Bob Kjellander was lobbyist.

Monk said as a reward for the business, Kjellander: "had given Tony $500,000 and that Tony was putting that in a separate account for the four of us."

Monk said he, Rezko and others didn't want anyone to know about the account: "Because it would have been illegal."
Was the money all for Rezko?
"No," Monk said. "That it would eventually be divided equally among us ... "After Rod was out of office."

Kjellander at the time was the National Republican committeeman.

Chris Kelly later blew his top at Rezko for withdrawing $100,000 from the account.
"By withdrawing the money it would make the account more visible than it otherwise would because there was activity in it," Monk said.

Kelly told Rezko to put the money back in, Monk said.
Kelly wasn't worried Rezko would take the governor's share just: "That the account would become known," Monk said.

Ultimately, Monk said he saw not a cent of the money.
"Do you know what happened to it?" Prosecutor Chris Niewoehner said.
Said Monk: "No"

Tony Rezko: Too risky for the stand?

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Former political fund-raiser Tony Rezko's name will likely be invoked numerous times in Rod Blagojevich's trial -- but chances are, jurors won't ever see his face.

Sources with knowledge of the government's case say prosecutors are worried that Rezko is too risky to put on the stand.

According to the sources, prosecutors fear Rezko brings with him much baggage of his own, could create a distraction, and worry that he'll "go off the reservation" if he testifies.

Rezko was convicted on his own corruption charges in 2008. Earlier that year, he accused prosecutors -- the same trio gearing up to try the Blagojevich case -- of pressuring him to lie about Blagojevich and then-Sen. Barack Obama.

To read the story, click here.

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