From KWQC
9/20/05
Q&A about alleged corruption in teachers pension fund
CHICAGO Gov. Rod Blagojevich's name has surfaced in connection with a political fundraising scandal involving the Illinois Teachers Retirement System. Here are some questions and answers concerning the ongoing federal investigation.
Q: What is the Illinois State Teachers Retirement System?
A: A $30 billion fund that pays the pensions of more than 325,000 retired downstate and suburban teachers.
Q: Who operates it?
A: Eleven trustees, four appointed by the governor, four elected by active teachers and two elected by retired teachers. The state schools superintendent is also a board member.
Q: What's the problem?
A: Federal prosecutors say investment firms paid kickbacks to do business with the fund and at least one was heavily pressured.
Q: What do investment firms do for the fund?
A: Invest the fund's money.
Q: Who was involved in the alleged kickback scheme?
A: Prosecutors say the scheme was engineered by former pension fund board member Stuart Levine, a millionaire campaign contributor, and carried out by Chicago attorneys Steven Loren and Joseph A. Cari _ a former chief fundraiser for the Democratic National Committee.
Q: What do those people say about the charges?
A: Levine has pleaded not guilty to attempted extortion, mail fraud and other charges. Cari has pleaded guilty to attempted extortion and Loren to attempting to impede tax collectors.
Q: How did the alleged kickback scheme work?
A: Prosecutors say money changed hands in the form of fees paid to consultants for helping investment firms to get fund business.
Q: What's wrong with such fees?
A: By themselves, such fees are legal. But prosecutors say these fees were passed through to political insiders in exchange for business. They cite one Virginia-based firm that was allegedly pressured to sign a contract with a consultant they had never met who did no work.
Q: Who pressured them?
A: Cari said in his signed plea agreement with prosecutors that he did.
Q: Why?
A: He says that he did it for Levine in hopes of getting help with another business venture.
Q: Who appointed Levine to the board?
A: Former Gov. George H. Ryan. Gov. Rod Blagojevich reappointed him.
Q: Who were these consultants?
A: Prosecutors haven't named them. Cari said in his plea agreement that Levine told him "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 state pension funds." Cari also quoted Levine as saying that to get state pension fund business private equity funds had to have a consultant who was "hired by Levine or those associates."
Q: Who is the high-ranking Illinois official?
A: He's not named in court papers. But two individuals familiar with the plea agreements, speaking only on condition of anonymity because of the sensitivity of the case, told The Associated Press the official the documents refer to is Blagojevich.
Q: What does Blagojevich say about that?
A: He says he knows nothing about the matter and would not tolerate such conduct. "I have no involvement whatsoever in anything surrounding the alleged corruption at the teachers retirement system, and nobody close to me does either," Blagojevich said Friday. He also says he does not know the identity of the official cited in the plea agreements.
Q: Who got the money?
A: The indictment says the scheme produced "hundreds of thousands of dollars in undisclosed kickbacks and payments for Levine and his nominees and associates." Loren's plea agreement says Levine told him that fees were passed through as rewards for campaign donors who gave money for the benefit of a "high-ranking public official."
Q: What Cari and Loren have said about a "high-ranking public official" _ it seems that the only basis for their statements is that they were told these things by Levine.
A: That's what's in the public record. Prosecutors won't say more.
Q: Can such statements be trusted?
A: Cari and Loren have agreed to help prosecutors in exchange for a break when they are sentenced. Defense attorneys could claim that the two men are saying whatever prosecutors want to hear. The two men could lose the sentencing break they are hoping for if prosecutors discovered that they were lying.
Q: Where is the investigation likely to lead?
A: Federal prosecutors are almost always stingy with answers to that question. Attorneys just say that wherever it leads, it's likely to go on for a long time.
Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
~~~~
-----------------------------------
~~