From the Tribune: 

Pension probe's spotlight widens 
Plea deal links plot to a top state official 
 
By Rick Pearson and Matt O'Connor, Tribune staff reporters. Tribune staff reporters Christi Parsons, Ray Gibson, John Chase and Ray Long contributed to this report 
Published September 16, 2005 
 
 Pleading guilty Thursday to attempted extortion, a prominent Democratic fundraiser said he was told that a "high-ranking Illinois public official" was behind a kickback scheme that steered state pension-fund investments to favored businesses in exchange for campaign contributions. 
 
 The plea agreement by attorney Joseph Cari, a former finance chairman for the Democratic National Committee, launched a new and potentially far-reaching phase of the investigation into influence peddling at the state's multibillion-dollar public pension funds. 
 
 In Cari's plea agreement and a related one by a former pension board attorney, prosecutors for the first time suggested that their investigation had gone beyond the dealings of political insiders at obscure pension panels to include a prominent government official orchestrating a scheme to siphon campaign cash and reward donors. 
 
 Neither plea agreement named the high-ranking person in Illinois government. He was referred to simply as "Public Official A." 
 
 Gov. Rod Blagojevich was peppered with questions about the plea agreements at an unrelated news conference but said he had no knowledge of them. Later, asked if the governor's office knew who the high-ranking Illinois official was, Blagojevich spokeswoman Abby Ottenhoff said, "We don't know who Official A is." 
 
 "The only people who know that are the feds. You'd have to ask them," Ottenhoff said. "This is speculation based on testimony from an admitted extortionist who got his information from a person who was twice accused of extortion himself." 
 
 Asked if federal investigators had questioned the governor, Ottenhoff said, "Not on this matter." 
 
 But Ottenhoff disclosed for the first time that federal investigators had questioned Blagojevich earlier this year about allegations that his administration traded appointments to state boards and commissions for campaign contributions. Blagojevich denied any wrongdoing, she said. 
 
 In pleading guilty to one count of attempted extortion, Cari said Stuart Levine acted as a conduit between the unnamed public official and the state Teachers' Retirement System to steer pension business to people and firms that would help the public official. 
 
 Levine is a prominent campaign donor who was initially named by a Republican governor to be a trustee of the pension fund for public teachers outside Chicago. He was reappointed by Blagojevich. Levine has pleaded not guilty to earlier charges that he extorted kickbacks from investment firms seeking pension fund business. 
 
 `A fundraising strategy' 
 
 In his plea agreement, Cari acknowledged trying to participate in a kickback scheme with Levine in 2004. He said Levine told him the selection of pension fund investors and others was motivated by politics. 
 
 "Levine said that a high-ranking Illinois public official [Public Official A], acting through two close associates, was selecting consultants for the private equity funds that appeared before the state pension funds," Cari's plea agreement said. 
 
 "Levine said that this was part of a fundraising strategy. Levine said that Public Official A, and his associates, were going to pick law firms, investment banking firms, and consultants that would help Public Official A," the plea agreement said. 
 
 The plea agreement said "Levine told Cari that consultants selected by Levine and those associates would subsequently be required to make certain political or charitable contributions as directed by Levine and those associates." 
 
 When a firm balked at hiring a Levine-selected consultant, who would do no work, Cari told the firm, according to the plea agreement, "that it was political and this was how Public Official A handled patronage." 
 
 Cari had repeatedly demanded that the firm, Virginia-based JER Inc., pay an $850,000 consulting fee, equal to 1 percent of the $85 million it was seeking from the teacher pension board to invest. Cari, in the plea agreement, said Levine repeatedly threatened to pull the JER investment from the agenda of the pension board unless the consulting fee was paid. 
 
 Cari said in his plea agreement that he believed Levine wielded great power over the teacher pension board and that "if Levine did not want something to be approved by the TRS board, it would not be approved." 
 
 In a related move, Steven Loren, formerly an outside attorney for the teacher pension board, pleaded guilty to one count of obstructing the Internal Revenue Service for allegedly helping Levine work a kickback scheme involving a Levine-favored consultant paid through a sham contract. The consultant received a finder's fee by an investment firm that got pension-fund business. 
 
 In the plea agreement, Loren said it was his understanding that "Levine's associates, who were close to a high-ranking public official, would use those placement fees as an incentive or reward to those who made campaign contributions that would benefit the high-ranking public official." 
  
 The plea agreement indicates that Loren began cooperating with the federal government early in its investigation. Loren gave prosecutors what is called a proffer letter on Nov. 23, laying out his knowledge of the activities of Levine and others. 
 
 That proffer and a one in July show that Loren was cooperating not only in the pension-fund case, but also in a second investigation involving Levine's role at the state's hospital planning and construction board, where he has previously been charged with extorting bribes, according to the plea agreement. 
 
 Levine has pleaded not guilty to those charges as well. 
 
 Sentencings postponed 
 
 Cari, 52, of Chicago and Loren, 50, of Highland Park, pleaded guilty just minutes apart in U.S. District Judge Amy St. Eve's courtroom. 
 
 Both are cooperating in the continuing federal probe, according to their plea agreements with the government. Their sentencings were indefinitely postponed until after their cooperation has been completed. 
 
 Under their plea deals with prosecutors, Cari faces about 2 years in prison, while Loren faces under 12 months in prison or possibly probation. 
 
 Each remains free on bail. 
 
 Both defendants and their lawyers, former U.S. Atty. Scott Lassar and Michael Siegel, declined to comment as they left the Dirksen U.S. Courthouse. So too did Levine's attorneys. 
 
 Aides to Blagojevich said that neither the governor nor his top administrative officials had been questioned about the pension investigation. 
 
 But Ottenhoff, the governor's spokeswoman, said Blagojevich had been interviewed by federal investigators in late February or early March about allegations, raised by the governor's father-in-law, Chicago Ald. Richard Mell (33rd), that appointments were traded for campaign cash. 
 
 "He answered the questions they had about Mell's allegations and he's never heard back," Ottenhoff said. 
 
 Mell recanted his allegations under the threat of a defamation lawsuit by top Blagojevich adviser and fundraiser Christopher Kelly. But Mell's accusations prompted Atty. Gen. Lisa Madigan and Cook County State's Atty. Richard Devine to open a joint investigation that is ongoing. 
 
 A spokesman for the U.S. attorney's office declined to comment Thursday on the plea agreements or the administration's acknowledgement that federal investigators were reviewing Mell's allegations.