November 30, 2005
A DALEY INDICTMENT? HERE'S WHY IT MAY OCCUR

ANALYSIS & OPINION BY RUSS STEWART

The legal dominoes are falling. Now that former Department of Streets and Sanitation deputy commissioner Dan Katalinic has pleaded guilty to one count of mail fraud in the burgeoning federal probe of the city Hired Truck program, it's increasingly likely that Victor Reyes and Al Sanchez will be indicted.

And if Reyes, the former director of the city Mayor's Office of Intergovernmental Affairs, and Sanchez, the former commissioner of the Department of Streets and Sanitation, are convicted, it becomes much more likely that Mayor Rich Daley will be indicted.

In analyzing Daley's vulnerability to an indictment, and possible culpability in wrongdoing, the following criteria are critical:

Nature of the crime. When the U.S. Attorney's Office pursues what it deems to be "public corruption," it's mix-and-match time. The relevant federal felony offenses include conspiracy, racketeering, obstruction of justice, tax evasion, mail fraud and wire fraud.

Conspiracy means colluding with another public official to commit an unlawful or criminal act. Racketeering is an organized conspiracy to commit the crimes of extortion or coercion. Extortion is the wrongful use of force or fear for personal or political gain. Coercion relates to compelling another person or entity to do or not do an act which they have a legal right to refrain from doing. Obstruction of justice means impeding those who are investigating wrongdoing, concealing or destroying relevant documents, or in any way "preventing" the administration of justice. Tax evasion means taking bribes and not reporting them as income. Mail fraud means using the U.S. mail as a conduit to transmit bribes, illegal campaign contributions or other documents. Wire fraud is conspiring on the telephone.

When an indictment comes down, it usually is of the cookie-cutter variety: Somebody's charged with "conspiring" to engage in "racketeering," using the medium of "mail fraud" or "wire fraud," thereby committing "tax evasion." The feds' philosophy is to pile on: to indict on dozens of counts. And the accused, faced with this vast array of offenses carrying considerable jail time, usually pleads guilty to a couple of minor counts and, as part of the plea bargain, "cooperates" with the feds to finger somebody else.

Time frame. Statutes of limitation range from 5 to 10 years on official corruption and tax evasion offenses. So the feds have to indict within that period.

Strategy and burden of proof. Prosecutors must prove their case beyond a reasonable doubt. The hard way is to assemble a vast array of documentary or circumstantial evidence. If the defendant won't plead, the feds have no guarantee of success. The easy way is to get a lower-echelon official, in exchange for a lenient sentence, to testify against a higher-echelon official.

To assess Daley's predicament, one must examine the feds' tactics in three key cases -- those of former city clerk Walter Kozubowski, former city treasurer Miriam Santos and former governor George Ryan.

First elected city clerk in 1979, Kozubowski embarked on a scheme that paid $476,000 over 12 years to six ghost payrollers who did little or no work in the office. In 1992 he was indicted on 21 counts, including racketeering, extortion, mail fraud, bank fraud and income tax evasion. Kozubowski allegedly paid himself from his campaign account and underestimated that amount on his federal tax returns; he also allegedly filed six false bank loan applications.

 A federal grand jury, as part of the "Haunted Hall" probe, began investigating Kozubowski in January of 1989. In April of 1993 he pleaded guilty to one count each of mail fraud, bank fraud and filing a false tax return. He resigned his office and forfeited all city contributions to his pension.

A onetime Daley protege, Santos was an assistant state's attorney when Daley held that office. When Daley was elected mayor in 1989, city Treasurer Cecil Partee was named his replacement as state's attorney and Daley picked Santos as the new treasurer.

But Santos became renowned as the "Irritating Ingrate." She soon began publicly feuding with City Hall. She ran for state attorney general in 1998, and during that campaign she allegedly told various banks in which she had deposited city funds to contribute to her. In 1999 she was indicted on five counts of attempted extortion, five counts of mail fraud and two counts of wire fraud. Her lawyer demanded an immediate trial, and the federal judge gave him one. Santos was convicted on six counts, and she spent 112 days in jail before an appeal overturned her conviction, based on the refusal to grant additional time to retain the attorney of her choice. But she was never re-tried; she pleaded guilty to one count of felony mail fraud.

Elected governor in 1998 after serving 8 years as Illinois secretary of state, Ryan was indicted in December of 2003on 18 counts of official corruption, including one count each of racketeering conspiracy and tax fraud, three counts of perjury, nine counts of mail fraud and four counts of filing false income tax returns. The racketeering conspiracy charge implies that Ryan colluded with others, who thereupon committed the crimes of extortion or coercion.

"The state of Illinois was for sale" under Ryan, said U.S. Attorney Patrick Fitzgerald at the time, who added that the taxpayers were "taken advantage of by Ryan and his greedy friends." The feds' "Operation Safe Road" investigation began in the early 1990s and focused then on bribes being paid to get driver's licenses. Ryan is the 66th person indicted in the probe; 59 have been convicted, among them his top aide (Scott Fawell), Ron Swanson, a close friend, and his inspector general (Dean Bauer).

As part of his plea agreement, Fawell is testifying against Ryan. Others have testified about Ryan's pampered lifestyle, free trips and wads of cash. One of Illinois' best lawyers is providing Ryan free defense counsel. But this much is clear: The Secretary of State's Office has long been a fertile source of campaign cash, as employees were expected to donate to their boss. Fawell was convicted of using state employees for political purposes. Ryan's co-defendant at trial, Larry Warner, is accused of shaking down state vendors for lobbying business, and then sharing the income with Ryan. The prosecution must prove beyond a reasonable doubt that Ryan knew about and condoned these acts and that he personally took cash. The chances of beating all of 18 counts are virtually nonexistent.

And how does this relate to the feds' probe Hired Truck? To date, 37 people have been indicted, and 24 have pleaded guilty. Angelo Torres, who ran the Hired Truck program for 4 years, admitted taking $56,000 in bribes. He allegedly was allied with the Hispanic Democratic Organization. A total of 13 people -- from either trucking companies or the city -- have been charged with either bribery or perjury. Some of the bribe money went to city officials, and some went as campaign contributions. The question is, did Daley, renowned as a hands-on manager, not know about this?

Don Tomczak, for 14 years the deputy commissioner in the city water department, controlled the allocation of hired trucks in his realm. Tomczak admitted receiving more than $400,000 in bribes from the companies, and he is testifying as part of his plea agreement. Tomczak also organized an army of water department employees who did political work; those who worked precincts and turned in the best performance got promotions and raises. The feds called the water department a "racketeering enterprise." Daley has been mayor since 1989. Did he not know about this?

Katalinic was the deputy commissioner of the Department of Streets and Sanitation. He said in his plea agreement that Daley's patronage chief, Bob Sorich, suggested in 1999 that he replicate Tomczak's feat and create an organization of 200 white department employees who would work precincts where Sorich directed. He would report back to Sorich, and those workers who performed best would get promotions or raises. Katalinic pleaded guilty to one count of mail fraud, and he will testify against Sorich, who has been charged with rigging the city's hiring system in violation of a federal court order. Sorich's predecessors as director of the intergovernmental affairs office were John Doerr and Victor Reyes. Katalinic's boss at streets and sanitation was Al Sanchez.

Both Sanchez and Reyes have departed from City Hall, but expect Katalinic to testify that they did what he did, namely, create an army of Hispanic city workers who would work precincts for Daley-supported candidates in Hispanic areas. Those who performed best would be promoted or given raises. Did Daley not discuss political strategy with Sorich and Reyes? Did the mayor not know that an army of city workers was at his political disposal?

My prediction: Remember the words "racketeering conspiracy." They may soon be used interchangeably with "Mayor Daley."