Federal ethics probe targets Ryan defender
Federal prosecutor Edward McNally is the target of an ethics investigation by the U.S. Justice Department over his involvement in the defense of former Gov. George Ryan, according to a letter from the department to Sen. Dick Durbin (D-Ill.).
McNally served until recently as the top federal prosecutor for southern Illinois. He now works in Washington in the Justice Department's criminal division. During the Ryan trial, he testified on the former governor's behalf. Before working for the government, McNally had represented Ryan as a lawyer in private practice.
"The allegations regarding the conduct of Mr. McNally are under review" by the Justice Department's Office of Professional Responsibility, assistant attorney general William Moschella wrote last week to Durbin. Durbin and Sen. Barack Obama requested the probe. In the letter, Moschella described the office as being "responsible for investigating allegations of misconduct" by Justice Department lawyers.
McNally could not be reached for comment.
After McNally took the stand in February, questions arose about his failure to disclose a potential conflict of interest that, according to prosecutors, might have influenced his testimony.
Before joining the government, McNally worked at the Chicago law firm Altheimer & Gray. The firm went bankrupt in 2003, leaving former partners including McNally responsible for its debts. Winston & Strawn, the law firm defending Ryan, also handled the Altheimer & Gray bankruptcy. Most of the former Altheimer partners agreed to pay creditors according to a plan crafted by Winston & Strawn.
Partners who didn't pay risked getting sued. Five former Altheimer partners did not participate in the bankruptcy plan. Of those five, four were sued by Winston & Strawn. McNally did not participate, but he wasn't sued.
Prosecutors on the Ryan case said McNally could have given testimony favorable to Ryan in exchange for Winston's refraining from suing him. The prosecutors called the situation a "huge financial conflict of interest."
Based on McNally's interest in the law firm, he owed LaSalle Bank more than $500,000 because of a loan to Altheimer, according to a formula in court documents.
The probe is also looking into whether McNally illegally tape-recorded a 2001 meeting between Ryan and the FBI. McNally testified at the Ryan trial about the meeting, and prosecutors suggested he had recorded it.