Feds charge 3 in kickback scheme
Allegations include $850,000 shakedown of investment firm
"This is how things are done in Illinois," the feds quoted one of the lawyers charged in the case as saying.
Businessman Stuart P. Levine, 59, of Highland Park, allegedly orchestrated the schemes involving hundreds of thousands of dollars in "finder's fees" paid to consultants representing companies with which the state Teachers' Retirement System invested or considered investing money.
Levine ﾽ appointed to the TRS board by former GOP Gov. George Ryan and reappointed by Gov. Blagojevich shortly before he resigned in July 2004 ﾽ was charged with attempted extortion, soliciting bribes, mail fraud and wire fraud. He will plead not guilty, his attorney said.
Levine's co-defendants, lawyers Joseph Cari, who became familiar with TRS after he helped to persuade its board to invest $35 million in an investment firm he worked for, and Steven Loren, TRS' former outside counsel, both have agreed to plead guilty and cooperate with federal prosecutors.
The feds say Cari uttered the "this is how things are done" statement during his alleged shakedown of an investment firm that he was pushing to hire a sham consultant linked to Levine for $850,000. Cari also allegedly told the firm "he was close to representatives of TRS" and an unnamed "high-ranking public official."
The indictment is sure to shake the political landscape. Cari, 52, of Chicago, is a member of the Democratic National Committee, was once its national finance chairman and served on its executive committee. Of late, he took an active role in helping promote the presidential aspirations of U.S. Sen. Joseph Biden (D-Del.).
Levine was campaign finance chairman for Republican Jim Ryan's failed 2002 campaign for governor against Blagojevich and has raised hundreds of thousands of dollars for GOP candidates.
This marks the second time in three months that the feds have identified Levine as a ringleader in complex deals to defraud state government, with Levine denying the charges. Levine and two others were indicted in May, charged in multimillion-dollar kickback schemes involving the Illinois Health Facilities Planning Board, on which Levine also served.
"We are obviously very concerned about how these state boards are operating," U.S. Attorney Patrick Fitzgerald said. "This is a broad investigation, and if there is anyone out there who has any information about any corrupt conduct regardless of which individual is involved on any of the state boards, we want them to come forward," he said. "People are coming forward. . . . There are other people talking to us, and this is a matter that we are going to continue to investigate."
The indictment focuses on three sets of alleged scams: the Cari-Levine shakedown of Washington, D.C., area real estate investment firm JER Partners; Levine's relationship with Chicago financial consultant Sheldon Pekin to route kickbacks to Levine's associates; and Levine's attempt to work with Loren, 50, of Highland Park, to create a company with which TRS could invest money and Levine could control, so he could siphon off profits.
Pekin was identified only as "Individual A" in the indictment, but the Chicago Sun-Times verified his identify through several sources. Pekin's lawyer has denied he has done anything wrong, and he has not been charged with a crime.
But the indictment alleges Levine worked to help companies Pekin was consulting with to get TRS investments, and that in two instances, Pekin was to split the money with Dr. Robert J. Weinstein, a close friend of Levine's who was identified as "Individual B."
In another instance, after Levine and other TRS members voted in August 2003 to invest $50 million with Glencoe Capital Partners, that firm paid Pekin $375,000. At Levine's insistence, the indictment states, Pekin diverted $250,000 of that windfall to another unnamed individual in the indictment, which the Sun-Times has confirmed is Glenview businessman Joseph Aramanda.
Like Pekin, neither Aramanda nor Weinstein has been accused of wrongdoing and neither could be reached for comment.
The indictment accuses Cari of acting as a go-between for Levine and JER, which was seeking $85 million in funds from the teacher pension system in spring 2004.
Skirting state laws that barred contact between TRS members and companies with pending business before the board, Levine sought Cari's help in relaying a demand that JER pay an $850,000 fee for a Levine-picked consultant or risk seeing its deal with TRS collapse, the indictment alleges. The contract was faxed to the company from an unnamed lawyer in the Turks & Caicos Islands in the Caribbean.
Prosecutors, who did not identify the consultant, said Cari agreed to make a series of phone calls to JER to deliver Levine's ultimatum after Levine promised to help steer other state pension business to an investment firm that Cari co-owned with a partner who was a friend of JER's president.
JER still wound up getting its deal with TRS despite refusing to cooperate with Levine.
Cari, who prosecutors said is cooperating with their probe, assisted Republican Jim Ryan in his unsuccessful 2002 gubernatorial bid, and state records show Cari later donated $15,000 to Gov. Blagojevich's campaign fund.
In a statement, TRS officials decried the alleged conduct of Levine, Cari and Loren.
"All ties between TRS and these individuals were severed more than a year ago," the statement read. "Their actions in no way reflect our values and our commitment to honest, effective administration of the pension fund. Moreover, it cannot detract from our consistent top-quartile investment performance.
"We have cooperated fully with the investigation, and we will continue to do so."