Feds: Ryan was at center of corruption

January 5, 2005

BY STEVE WARMBIR AND TIM NOVAK Staff Reporters

Year after year, the muck of dirty deals swirled around former Gov. George Ryan.

Now, he's been dunked into the thick of it.

Thanks in large part to the man he once treated like a son, onetime Republican golden boy Scott Fawell.

Federal prosecutors on Tuesday wielded detail after detail in a court filing to portray Ryan as the controlling force behind systemic corruption that benefited himself, his family and his friends, including businessman Larry Warner.

The feds have never alleged Ryan extorted cash for specific favors. He simply took care of his friends over the years, the feds contend.

And those friends, including Warner, took care of Ryan and his family.

Prosecutors' allegations

Fawell -- Ryan's former right-hand man, his keeper of the master list of favors, his detail guy -- has talked and talked with investigators, and the most details yet have emerged of Ryan's alleged involvement in the nitty gritty of the day-to-day corruption that allegedly infected his office.

Ryan allegedly ordered up a state lease for one pal, Harry Klein, who played host to Ryan in Jamaica every January. Ryan even got steamed when he didn't get to break the news to Klein that the deal had gone through, prosecutors allege.

Ryan, the feds say, had details rewritten in one state contract to help Warner.

And Ryan allegedly smoothed the way for a sweetheart state lease for Warner, who later griped he should have never done it.

Not because Warner didn't make enough money.

But because it was "too good a deal" and could raise uncomfortable questions for Warner.

Attorneys for Ryan and Warner on Tuesday blasted the new details in the 114-page government court filing. Ryan's lawyers fought hard in court to keep the filing secret until the trial for both men starts in March. They argued the prosecution's version could bias potential jurors.

"George Ryan vigorously denies the hearsay allegations and innuendo that make up the government's one-sided submission," said Bradley Lerman, an attorney for Ryan. "We are confident that the government's case will not withstand the scrutiny of a jury, and we look forward to our day in court."

"It's all a pack of lies," Warner's prominent attorney, Edward Genson, said about the government's filing.

Before, in public testimony and filings, Ryan was portrayed at times as on the sidelines of corruption, allowing it to continue through his silence.

Now, he's calling out the plays, according to the latest government filing.

'Let's help Larry if we can'

Ryan gave the run of his secretary of state's office to his lobbyist pals, the feds allege. Warner was so plugged in he knew ahead of Ryan himself when plum, low-level license plate numbers were available.

Warner got private state information on contracts before the bidders themselves. And he allegedly flaunted his power.

At one Ryan fund-raiser, Warner, near a group of secretary of state employees, bragged to a businessman who had hired him that he could get "any of these people fired tomorrow," the feds allege.

Warner had good cigars and cheap cigars on him, and offered a good one to the businessman.

The cheap ones were for secretary of state employees, explained Warner, who made millions from state contracts.

If there was any question as to Warner's power, Ryan made clear who should get what favors.

"Let's help Larry if we can," Ryan, in substance, supposedly told Fawell many times, the feds contend.

In the early 1990s, Fawell became concerned about Warner's role in some of the sweetheart deals involving leases for secretary of state offices. If Warner's role became known, Fawell worried about the political fallout.

The government filing contends that "Warner responded that no one would find out about Warner's involvement because there were various layers of paperwork and Warner's name was buried in the various layers."

"Ryan was present for this conversation," prosecutors allege in their filing.

Fawell allegedly carried out the orders of Ryan, his political mentor. Even when Fawell had been sentenced to 61/2 years behind bars in 2003 for using state employees to do political work for Ryan, Fawell balked at talking to the feds.

It was the jail time that Fawell's fiancee faced for a conviction in the corruption probe that prompted Fawell to flip and help prosecutors last year.

In the government's filing, and with Fawell's perspective, prosecutors assert that Ryan not only benefited from state workers doing political work for him on the public's dime but had a "cavalier" attitude toward it.

Ryan even instructed Fawell to siphon some money from campaign spending by Phil Gramm in 1996 and give some to Ryan's children. Ryan had endorsed Gramm for president and was working on Gramm's Illinois campaign.

Feds: Ryan's relatives gained too

The Ryan family benefitted in other ways as well, mainly from Ryan's lobbyist pals, the feds allege.

One lobbying friend allegedly paid $2,200 for Disney World accommodations for the family of one of Ryan's daughters.

The same pal, Ron Swanson, who has pleaded guilty in the corruption probe, gave Ryan and his wife plenty of goodies: a St. John's dress, a limoge box, Cuban cigars, golf bags and ornate figurines.

Swanson got nice perks too, including a parking space at the State Capitol, even though he was a lobbyist.

Warner helped the Ryan family too. He fronted money to Ryan to have his roof fixed, shelled out money to help a Ryan daughter with a flooding problem and invested $6,000 in the cigar business of Ryan's son. Ryan may have paid part of the money for the roof back, the feds say.

When outside investigators began looking into what was going on in Ryan's office, even at a low level, Ryan bristled, the feds claim.

At one point, the Cook County state's attorney at the time, Jack O'Malley, and his public integrity chief, Patrick Quinn, were talking to Ryan about bringing more prosecutions of crooked employees in the secretary of state's office.

Ryan had a blunt reply.

"F--- you, Jack, these are my guys," Ryan allegedly said, according to Quinn. O'Malley, though, did not recall the comment, prosecutors said.

THE CAST OF CHARACTERS

These are a few of the many people involved in the case of the United States of America vs. Larry Warner and George H. Ryan Sr.

GEORGE RYAN
Former governor and secretary of state charged with racketeering for allegedly letting his friends cash in on state contracts while providing cash benefits to Ryan and his family. Ryan left office two years ago, and is living on his state pension worth more than $185,000 a year, the richest for any retired Illinois governor.

SCOTT FAWELL
Ryan's former top aide, Fawell is serving a six-year prison sentence for corruption. Often described as having a father-son relationship with Ryan, Fawell is squealing on his former boss to save his fiancee, Andrea Coutretsis, from prison.

DONALD UDSTUEN
One of Ryan's closest advisers and a top honcho at the Illinois State Medical Society, Udstuen pleaded guilty more than two years ago, admitting he took more than $300,000 in kickbacks on state contracts issued under Ryan. Udstuen is cooperating with federal authorities, hoping it will keep him out of prison.

LARRY WARNER
Ryan's co-defendant in the racketeering case, Warner was also a close Ryan adviser who allegedly demanded money from companies seeking business with the secretary of state's office. He allegedly split the cash with Udstuen and Ryan.

ARTHUR "RON'' SWANSON
Once served with Ryan in the state Legislature, Swanson became fast friends with Ryan. Swanson allegedly landed several lobbying contracts with Ryan's help, including a deal at McCormick Place that required him to do little or no work. Swanson pleaded guilty last spring, admitting he lied to a federal grand jury about the job.

HARRY KLEIN
A currency exchange mogul who opened his Jamaica home to Ryan and Fawell, Klein allegedly concocted a scheme to make it look like they were paying to stay there. Ryan allegedly ordered his staff to give Klein a lucrative, unbreakable lease for a driver's license facility in South Holland. Ryan also agreed to boost fees at currency exchanges.

ROGER KILEY
Mayor Daley's former chief of staff is now a partner at the law firm of Mayer Brown Rowe & Maw, the exclusive lobbyist for McCormick Place and Navy Pier. While Fawell was running McCormick Place, he asked Kiley to hire Ron Swanson as a lobbyist, fulfilling a request from Ryan, prosecutors say. Swanson allegedly did little or no work under the deal that cost taxpayers $5,000 a month.

ROBERT KJELLANDER
A top state Republican Party leader who ran President Bush's Midwestern campaign. Kjellander was a lobbyist for IBM in the early 1990s when Udstuen and Warner helped the company win a lucrative computer contract with Ryan's office.