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U.S. lays out Ryan case

Ex-governor greased way for pals, file alleges

By Matt O'Connor, Tribune staff reporter. Tribune staff reporter Ray Gibson contributed to this report

January 5, 2005

Federal prosecutors tipped their hand Tuesday in their case against former Gov. George Ryan, showing how they will portray him in his upcoming trial as an active participant in a scheme to sell access to state contracts.

A 114-page document unsealed by a judge Tuesday portrays a government for sale, where Ryan's lobbyist friends could demand cash from companies that wanted to do business with the secretary of state's office.

Federal prosecutors have charged that in return, lobbyists showered Ryan and his family with cash, loans, cigars, art figurines and stock tips--even chipping in for Ryan's daughter's wedding.

Tuesday's filing, called a Santiago proffer, gives new details of those charges, providing the best public view yet of the evidence prosecutors have against Ryan, who went on from the secretary of state's office to become governor from 1999 to 2003.

When a lobbyist wasn't getting access to a state government department head, then-Secretary of State Ryan picked up the phone and leaned on the official to return the lobbyist's calls, according to the new government filing.

The filing named the lobbyist as Lawrence Warner, a close associate of Ryan's and a man who held tremendous sway in determining who got business with the secretary of state's office.

"Warner is your friend," Ryan chided the department head, according to the filing.

In another new detail, Ryan allegedly tried to shoo away prosecutors looking for corruption in his office.

Before a 1992 news conference to announce charges of corruption at a driver's license facility, then-Cook County State's Atty. Jack O'Malley discussed possible additional probes, allegedly prompting an angry Ryan to swear at him and say, "Jack, these are my guys."

O'Malley doesn't recall the conversation, but Patrick Quinn, a former top prosecutor and now a state Appellate Court judge, was "stunned by the import of the statement--that Ryan's political people were not to be touched," the government said.

A statement issued on Ryan's behalf by his lawyers said the former governor "vigorously denies the hearsay allegations and innuendo that make up the government's one-sided submission."

"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," the statement said.

An attorney for Warner did not return a telephone call seeking comment.

Ryan's lawyers sought to block the release of the government filing because of concerns it would taint potential jurors in Ryan's March 14 trial.

"The sooner we get this information out, the sooner it becomes part of yesterday's news," U.S. District Judge Rebecca Pallmeyer said in ordering it unsealed. Lawyers for the Chicago Tribune intervened in the legal dispute on Monday.

The filing offered the first glimpse of the cooperation given by Scott Fawell, Ryan's former top aide, who decided to cooperate last summer in an attempt to win a reduced sentence for his fiance, Alexandra Coutretsis.

In conversations with Fawell, Ryan made it clear that helping Warner and other close friends was a priority during his tenure as secretary of state, the government alleged. "Let's help Larry if we can," Ryan was alleged to have told Fawell multiple times in reference to state contracts and business, the filing said.

With Ryan's approval, Fawell decided to be "a central control person" to facilitate the steering of contracts to Ryan's friends and others, "most often with Ryan's approval," the government said. To keep track of the favors, Fawell created a "master" list of those awarded jobs, contracts, leases and low-digit license plates, the filing said.

Shakedowns alleged

Over Ryan's eight years as secretary of state, Warner allegedly shook down a succession of executives at American Decal & Manufacturing to keep a lucrative contract to produce vehicle registration validation stickers, often by threatening to go to a competitor if the kickbacks stopped, the government alleged.

James Covert, head of the office's Vehicle Services Department, told authorities he steered another contract to the company at the urging of Warner, believing that Warner had the backing of Ryan, according to the filing.

Covert said that by late 1992 or early 1993, he personally warned Ryan that Warner was meddling in his job and manipulating contracts, government said.

"Warner is your friend," Ryan reportedly responded, instructing Covert to cooperate with Warner, the filing alleged.

Later in 1993, Ryan was alleged to have personally intervened when Covert and others changed the specifications on the contract for the stickers by removing the requirement for a security mark, threatening American Decal's chances of keeping the contract.

Ryan asked Covert if he could retrieve the specifications from a rival bidder "quietly," so as not to call attention to the fact that the change had been reversed, the government said.

Warner and two other lobbyists, Donald Udstuen and Arthur "Ron" Swanson, both Ryan friends, also were alleged to have tried to solicit as much as $1 million from Honeywell-Bull in order for the company to keep a computer mainframe contract with the state.

A company representative, Robert Cook, a Springfield attorney who happened to be a friend of Ryan's, reported the solicitation personally to Ryan, saying Udstuen had claimed to have Ryan's blessing, the government alleged.

In a meeting in his Springfield office, Ryan promised to get to the bottom of it but later called Cook and criticized Honeywell for "misreading" Udstuen's intentions, according to the filing.

Udstuen has pleaded guilty and is cooperating with the government.

Prosecutors also alleged for the first time that Ryan wanted a new digital license contract to go to a joint venture between Viisage Technologies, a Massachusetts firm, and Unisys, whose representative was the wife of prominent lobbyist Alfred Ronan, a former state legislator. Ronan, Unisys' lobbyist, also attended a meeting with Ryan at which his wife, Catherine Adduci, made a pitch for the contract, the government said.

U.S. tells of private meeting

Ryan asked to speak with Ronan privately after the meeting concluded, prosecutors said. Ronan later told Adduci that Ryan wanted Unisys to consider teaming up with Viisage in the deal, the filing said. Ryan reportedly told Ronan that Unisys' proposed partner was "not the right horse," the filing said.

Ronan's lobbying firm pleaded guilty last year in connection with a bid-rigging scheme at McCormick Place.

Ryan also wanted Adduci to contact Warner about Viisage, the government said.

According to the filing, Ryan and Fawell had come up with the idea of the joint venture in an attempt to help both Ronan and Warner win the contract.

But in the end the joint venture between the two didn't work out, authorities said.

With Warner lobbying on behalf of the firm, Viisage won the contract. But Warner was unhappy when Ryan reportedly wanted him to split some of the fees with Swanson, the government contended.

While the contract was up in the air, Warner as well as a business partner of Ryan's son and the husband of a Ryan niece profited on purchases of Viisage stock, the government alleged.

Within days of Viisage being awarded the contract in 1997, Warner paid $3,185 toward wedding expenses for one of Ryan's daughters, prosecutors alleged.

According to the filing, Warner provided numerous other gifts to Ryan and his family. He passed on stock tips, hosted multiple fundraisers and lent money to several Ryan relatives, including $6,000 for a cigar shop of Ryan's son, George Jr., the filing said.

In addition, Warner provided $145,000 in financial benefits to Comguard, a financially troubled company partly owned by Ryan's brother, Thomas, a former mayor of Kankakee, according to the filing.

Swanson, who has pleaded guilty, also lavished gifts on Ryan and his family, including $2,200 for Disney World accommodations for the family of one of Ryan's daughters and money with which Ryan gambled, the government alleged.

In return, Ryan allegedly rented office space from a Swanson client, steered him other business and tipped him that Grayville had been selected for a prison site, allowing Swanson to fraudulently win a $50,000 lobbying fee from the town, the government charged.

In addition, Swanson was allowed full use of an anteroom next to Ryan's office, allowing him "virtually unrestricted access to Ryan and Ryan's staff," the filing said.

The government also alleged that Ryan instructed Fawell and others to place a driver's license facility in a South Holland building owned by Harry Klein, a friend. To make that happen, a facility in the Lake Calumet area had to be shut down, prosecutors disclosed.

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The major players

Federal prosecutors alleged in a document unsealed Tuesday that then-secretary of state George Ryan and his friends conspired in the sale of state contracts. Here are some of the allegations:

GEORGE RYAN (ABOVE)

Before 1992 announcement of corruption charges at a driver's license facility, Ryan balked at further probes, telling then-Cook State's Atty. Jack O'Malley: "Jack, these are my guys."

SCOTT FAWELL

The former top aide discussed with Ryan early in his 1st term about Ryan's desire to try to keep his friends "happy." Fawell understood this to mean giving them state business whenever possible.

ARTHUR `RON' SWANSON

Lobbyist told a Ryan friend that he was "taking care" of Ryan.

Swanson regularly made large bank withdrawals on Ryan's birthday.

LAWRENCE WARNER

Lobbyist often referenced his "connections" with secretary of state's office and made clear he was Ryan's close personal friend.

Tribune file photos; Sources: U.S. court filing

Copyright 2005, Chicago Tribune

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