McHenry County Blog

The Securities Exchange Commission seal.

Maybe that headline is a little bold, but we’re talking Rod Blagojevich here.   Read the following press release from the United State Securities Exchange Commission and write your own in the comment section:

SEC Charges Illinois for Misleading Pension Disclosures

Washington, D.C., March 11, 2013 — The Securities and Exchange Commission today charged the State of Illinois with securities fraud for misleading municipal bond investors about the state’s approach to funding its pension obligations.

[You can read the SEC order here.]

An SEC investigation revealed that Illinois failed to inform investors about the impact of problems with its pension funding schedule as the state offered and sold more than $2.2 billion worth of municipal bonds from 2005 to early 2009.

Illinois failed to disclose that its statutory plan significantly underfunded the state’s pension obligations and increased the risk to its overall financial condition.

The state also misled investors about the effect of changes to its statutory plan.

Illinois, which implemented a number of remedial actions and issued corrective disclosures beginning in 2009, agreed to settle the SEC’s charges.

“Municipal investors are no less entitled to truthful risk disclosures than other investors,” said George S. Canellos, Acting Director of the SEC’s Division of Enforcement.

“Time after time, Illinois failed to inform its bond investors about the risk to its financial condition posed by the structural underfunding of its pension system.” [Emphasis added.]

Elaine Greenberg, Chief of the SEC’s Municipal Securities and Public Pensions Unit, added, “Regardless of the funding methodology they choose, municipal issuers must provide accurate and complete pension disclosures including the effects of material changes to their pension plans. Public pension disclosure by municipal issuers continues to be a top priority of the unit.”

According to the SEC’s order instituting settled administrative proceedings against Illinois, the state established a 50-year pension contribution schedule in the Illinois Pension Funding Act that was enacted in 1994.

The schedule proved insufficient to cover both the cost of benefits accrued in a current year and a payment to amortize the plans’ unfunded actuarial liability.

The statutory plan structurally underfunded the state’s pension obligations and backloaded the majority of pension contributions far into the future.  [This was passed while Jim Edgar was Governor.]

This structure imposed significant stress on the pension systems and the state’s ability to meet its competing obligations – a condition that worsened over time.

The SEC’s order finds that Illinois misled investors about the effect of changes to its funding plan, particularly pension holidays enacted in 2005.

Although the state disclosed the pension holidays and other legislative amendments to the plan, Illinois did not disclose the effect of those changes on the contribution schedule and its ability to meet its pension obligations. [Emphasis added.]

The state’s misleading disclosures resulted from various institutional failures.

As a result, Illinois lacked proper mechanisms to identify and evaluate relevant information about its pension systems into its disclosures.

For example, Illinois had not adopted or implemented sufficient

• controls
• policies or
• procedures

to ensure that material information about the state’s pension plan was assembled and communicated to individuals responsible for bond disclosures.

The state also did not adequately train personnel involved in the disclosure process or retain disclosure counsel.

According to the SEC’s order, Illinois took multiple steps beginning in 2009 to correct process deficiencies and enhance its pension disclosures.

The state issued significantly improved disclosures in the pension section of its bond offering documents, retained disclosure counsel, and instituted written policies and procedures as well as implemented disclosure controls and training programs.

The state designated a disclosure committee to assemble and evaluate pension disclosures.

In reaching a settlement, the Commission considered these and other remedial acts by Illinois and its cooperation with SEC staff during the investigation.

Without admitting or denying the findings, Illinois consented to the SEC’s order to cease and desist from committing or causing any violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933.

The SEC’s investigation was conducted by Peter K. M. Chan along with Paul M. G. Helms in the Chicago Regional Office and Eric A. Celauro and Sally J. Hewitt in the Municipal Securities and Public Pensions Unit. They were assisted by other specialists in the unit including Joseph O. Chimienti, Creighton Papier, and Jonathan Wilcox.

This enforcement action marks the second time that the SEC has charged a state with violating federal securities laws in their public pension disclosures.

The SEC charged New Jersey in 2010 with misleading municipal bond investors about its underfunding of the state’s two largest pension plans.

Additional information about the SEC’s initiatives in the area of municipal securities can be found in its Report on the Municipal Securities Market released last year.

A press release from Congressman Joe Walsh:

Duckworth Campaign Finance Chair Paid to Play in Blago Administration

Part of an editorial cartoon about Rod Blagojevich.

Recently it was discovered that 21 donors to Tammy Duckworth’s congressional campaign also funneled $3 million into a Super PAC (House Majority PAC) attacking Congressman Joe Walsh.

Now, it has been discovered her campaign finance chairman, William Brandt Jr., was the beneficiary of an appointment to run the Illinois Finance Authority by Rod Blagojevich after Brandt’s company donated $165,000 to Blagojevich’s reelection campaign.

Congressman Joe Walsh stated, “Tammy Duckworth’s liberal elite donors have tried to buy her a congressional seat, and now we know that the head of her fundraising effort, William Brandt Jr., bought a Blago appointment after contributing $165,000 to his campaign.

“Brandt was appointed as head of the Illinois Finance Authority, which provides public money to businesses and organizations.

“What’s even more telling is that in Brandt’s first meeting as head of the IFA, he fired the board’s lobbyist for what was deemed a ‘political decision’ by Governor Blagojevich’s office.

“This is not far off the path of Tammy Duckworth’s actions, who as a fellow Blago appointee attempted to fire, humiliate and threaten two whistleblowers in the Illinois VA.”

Walsh concluded, “The Duckworth for Congress campaign is a group of political insiders from the Blagojevich era, including Ms. Duckworth herself.

“The more voters learn about Ms. Duckworth’s Chicago machine style politics, the more they are turning away from her.

“If Ms. Duckworth wants to prove she’s as independent minded as she advertises herself to be, she should remove fellow Blago appointee William Brandt from her finance committee and return the money from the 21 donors to her campaign that also donated the George Soros backed House Majority PAC.”

Read more about William Brandt Jr.’s firing of an Illinois Finance Authority lobbyist here.

A press release from the U.S. Attorney’s Office:

BLAGOJEVICH TRIAL TEAM RECOGNIZED BY ATTORNEY GENERAL HOLDER AT ANNUAL AWARDS CEREMONY

CHICAGO — The team of a dozen investigators, prosecutors and a paralegal whose outstanding work throughout Operation Board Games led to the successful prosecution of former Gov. Rod Blagojevich and others received the Attorney General’s Award for Distinguished Service at a ceremony today in Washington.

Attorney General Eric Holder recognized 282 Justice Department employees for their distinguished public service at the 60th Annual Attorney General’s Awards Ceremony. Fifty-seven other individuals outside of the department were also honored for their work. Held at DAR Constitution Hall, the ceremony recognizes both department employees and others for their outstanding dedication to carrying out the Department of Justice’s missions.

The recipients, from the U.S. Attorney’s Office for the Northern District of Illinois, are

• Assistant U.S. Attorneys Debra R. Bonamici, deputy chief of the appellate section, and Carrie E. Hamilton, deputy chief of public corruption;
• former Assistant U.S. Attorneys Christopher S. Niewoehner and Reid J. Schar; and
• Paralegal Specialist Chrissy M. Stein.

Also receiving the award, from the

• Chicago Field Office of the Federal Bureau of Investigation, Supervisory Special Agent Patrick J. Murphy and
• Special Agents David D. Bray II, Daniel W. Cain and Jay G. Hagstrom;
• U.S. Department of the Treasury’s Internal Revenue Service, Supervisory Special Agent Vikas K. Arora;
• U.S. Department of Labor’s Office of the Inspector General, Special Agent Irene E. Lindow;
• U.S. Postal Inspection Service, Postal Inspector Silvia M. Carrier.

“This year’s award recipients have made significant contributions across, and far beyond, the Department of Justice and helped to protect the rights, safety and best interests of the citizens we are privileged to serve,” Attorney General Holder said.

“I am grateful for the dedication and passion that these extraordinary public servants bring to their work, and I am honored to count them as colleagues.”

Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, said: “The entire U. S. Attorney’s Office is honored by the Attorney General’s recognition of our colleagues, past and present.

“The nights and weekends they worked; the creativity and brilliance they displayed; the legal and investigative acumen they brought to an immensely complex investigation — all of it was with the ultimate purpose of ‘doing the right thing.’

“This award recognizes the team, and those who stood behind them, for doing it better than most.”

Working together since 2004, the award recipients were primarily responsible for the convictions of at least 15 individuals involved in rampant corruption at the highest levels of Illinois government, including Blagojevich, two of his chiefs-of-staff, and various insiders who profited from their relationships with corrupt officials.

The award was bestowed for the team’s outstanding work in convicting Blagojevich and others of fraud, extortion, and bribery relating to corrupt acts that occurred from 2002 through 2008.

The team’s dedicated and exhaustive pursuit of evidence, as well as its compelling presentation of that evidence over multiple lengthy trials, resulted in the successful prosecution of Blagojevich and others for crimes related to the selling of a U.S. Senate seat, the extortion of a children’s hospital, the attempted bribery of a campaign contributor, as well as other criminal acts related to the corrupting of the state of Illinois.

The email read, “Here’s a picture of the convicted IL governor’s first night in prison of his 14 year sentence. Gosh! They make a handsome couple!”

A cartoon sent to me from out-of-state after disgraced Illinois Governor Rod Blagojevich was incarcerated in Colorado. "They call me Rod, too," the larger inmate with his hand on Rod's arm says.

As those who have followed my 1990′s political career, my social conscious cause of that decade was stopping rape in prison.

The latest newsletter from Just Detention International, which used to be called Stop Prison Rape, has the headline you see below:

Headline of an article in the Just Detention International March newsletter.

Joking may have ended at the prison, but the cartoon above indicates that those on the outside still joke about rape in prison.

In 2003, the Prison Rape Elimination Act was passed.

Unanimous consent.

President George W. Bush signed the bill.

A commission was formed which held hearings and made recommendations.

These were submitted to the United States Department of Justice.

Regulations were put out for public comment. People, including yours truly, did so.

Since then, President Barack Obama’s Justice Department has done nothing.

The regulations were supposed to have been issued by Eric Holder last summer.

One of the Congressmen who pushed the bill through the House, Frank Wolf (R-VA), commented,

“I’ve talked to people who have been raped in prison. [PREA] passed in 2003.

“It was signed by President Bush.

“This was one of the few times I ever went to the Oval Office for a bill signing — because I cared about it. That’s nine years.

“There have been a lot of bad things that have happened to a lot of people during that period of time.

“We really have to finish this thing.”

I know nothing counts for the White House but winning the next election, but it’s time to promulgate the regulations.

And it’s time to stop joking about rape in prison.

And, no, this is not an April Fool’s joke.

This is what is on the Chicago Tribune's web site about impeached and convicted felon Rod Blagojevich's "Do Not Pass Go, Go Directly to Jail" speech.

And that’s about all I want to know about it.

The headline did inspire me to humming,

“I Fought the Law and the Law Won.”

A press release from State Senator Pam Althoff:

Sen. Pamela Althoff: Statement on former Gov. Blagojevich’s impending imprisonment

“As news outlets and TV cameras faithfully cover Rod Blagojevich’s final remarks as a free man, I would like to remind everyone to remember why he’s rightly about to lose his freedom today.

While State Senator reminds of the financial mess in which disgraced former Governor Rod Blagojevich left Illinois, McHenry County Blog gives a TeleTubby Bye-Bye to half of JimRod, the Two-Headed Chicken.

“Through his individual actions and reckless leadership he not only brought disgrace to his office, but also financial ruin to the state he was twice elected to govern and protect.

“While Blagojevich may lament the fact he faces more than a decade in prison away from his family, I am lamenting the fact taxpayers 30 years from now will continue to be saddled with the bills for his unrestrained spending and borrowing.

“With the help of his enablers in the legislative leadership, Rod Blagojevich doubled the state debt, took numerous pension holidays and exponentially expanded entitlement programs.

“For six years, many of us in the General Assembly warned about the long-term consequences of these reckless actions that are only now being addressed.

“Although I appreciate those who say their ‘thoughts and well wishes’ are with Blagojevich’s wife and children today, my thoughts are instead with the countless vulnerable citizens of tomorrow who have been handed the price-tag for his irresponsible policies.”

JimRod, the Two-Headed Chicken was yellow, just as the above TeleTubby is.

= = = = =

Never heard of JimRod?

Then you missed the best part of my 2002 Libertarian Party campaign against Blagojevich and Jim Ryan.

Although I had more governmental experience than both of them put together (actually, probably because of that fact), they conspired to avoid the Illinois League of Women Voters Debate.  I qualified for it by getting more than 5% of the largest poll taken during the campaign.  That approximate 1,000 person poll was taken by the Daily Southtown.

When they decided to only have one-on-one debates, the campaign dubbed them “JimRod, the Two-Headed Chicken.”

This was found on a car of a businessman who attended the second meeting of the McHenry County Business Committee at McHenry’s American Community Bank:

Limit All Politicians to 2 Terms. One in office-one in prison. We Already Do This in Illinois.

Not until taking leaves to the street did I discover this copy of the Northwest Herald in our driveway.

Tonight while finishing leaf raking for the fall, I noticed something in a plastic sleeve at the end of our driveway.

Unwrapping it, I found that it was a solicitation from the Northwest Herald, along with a copy of the paper.

Above the fold were articles about ex-Governor Rod Blajojevich’s 14-year sentence and the rejection of both Centegra’s and Mercy’s applications for new hospitals.

Somehow, the summitry of the two stories appealed to me.

After all, it was Stuart Levine’s insistence on his favorite construction firm to build Mercy’s Crystal Lake hospital that started the unraveling of the Blagojevich corruption.

The Northwest Herald's subscription apeal.

But, back to the NWH’s offer.

Just $1 a week.

75% off the “regular home delivery price!”

“Hurry…Offer expires 12/31/11.”

Strange.

I have had multiple calls this year offering the same deal.

The pitch must have worked, because, unlike all sorts of other newspapers, the NW Herald’s circulation has been holding constant on weekdays and is up a bit on Sunday.

Somehow the NW Herald does not seem willing to match its penny for six months subscription offered at a Crystal Lake Business Expo several years ago.

That was too good a deal to pass up.

Last night watching the news about our soon-to-be incarcerated ex-Governor Rod Blagojevich, my wife commented that the real crooks still are in control.

The line under the Onion’s photo of Blagojevich seems to express her opinion more pointedly:

The headline says, "Least Corrupt Politican in Illinois History Sentenced to 14 Yeras in Prison."

In reading Capitol Fax comments on whether Rod Blagojevich’s sentence will deter political corruption and found this one from a former prosecutor which I would like to share:

As a former prosecutor, I’ve thought about this a lot. I think that jail sentences for white collar crimes have some deterrent value, and some value for expressing society’s outrage. The outrage for Blago — both because of his own conduct and because he succeeded Ryan as a “reformer” — was great.

That being said, I agree with Jack Abramoff, the convicted DC lobbyist, who has been in the media promoting his new book. The worst type of corruption is the legal corruption.

Example 1: I get the bill you want passed. A couple of weeks later you get an invitation to my fundraiser. I make a comment to you at some point that isn’t quite a quid pro quo, but lets you know that I know who my contributors are. Nothing can get prosecuted.

Example 2: Relatives/friends of the mayor are the winning bidders! The mayor may not have told anyone to help them with the contract. He/She may not even know about it. Underlings just help make sure it happens.

Example 3: You hire my law firm to do real estate tax appeals. I don’t handle the appeals – my partners do. My friends and political supporters are the assessor and on the zoning board of appeals. My partners are really good real estate appeals lawyers and they (almost) always win. You don’t even have to contribute to me, just pay your legal fees. I make contributions to my friends, of course. And if you happen to have other business up before my office/committee, I may remember that you hired me. I may even loudly announce that I recuse myself.

Nothing prosecutable here, folks. Just business as usual. Money flowing into the system. Money elects people who keep the system running. New people get their take for their campaigns.

If a politician is greedy, and/or not very smart, he or she might be so obvious about it that the politician “crosses the line” between legal and illegal, and risk being “caught” and prosecuted.

So, in a way, catching Blago, Ryan, etc., is only catching some of the ones who are most stupid and/or arrogant. It’s not deterring the pros from legal corruption.

But that doesn’t mean it isn’t worthwhile. The public needs to know what goes on. And while the legal corruption is horrible, corrosive, and destructive, the outright bribery and extortion is also bad. Sunlight and bleach need to be used on the system as much as possible. They help a little. But these prosecutions, at best, deter some illegal corruption. They don’t stop the bulk of the legal trading of money for access and governmental contracts and favors that is, at best, a necessary side-effect of our system.

My suggestion is incarceration in state prison:

• elected by their peers
• judged by their peers
• punished with their peers

A female cancer survivor loudly told Rod Blagojevich outside his home, "My brother was in Joliet. You can do it, man."

Of course to get in Joliet you have to be prosecuted in state court by a State’s Attorney.

The last time a major politician served time in a state prison, East Moline, it was Congressman Mel Reynolds.

Where are the State’s Attorneys of Illinois when it comes to prosecuting political corruption.

Lost in space?

In any event, when I heard the woman yell encouragement to sentenced felon Rod Blagojevich, just having been addressed “Governor” by Judge James Zagel because he won two elections, it reminded me of my idea to put a bit more fear of breaking laws into the minds of those corrupt and tempted to become corrupt in Illinois’ political class:
Make them serve their time in state prison.

State prison is much more severe than the Federal pen.

Not that I have any experience with the Federal prison system, but I’ve been in plenty of Illinois’.

Trust me.

You don’t want the neighborhood kid there.

And state incarceration would be so appropriate for the crooks in the political class:

• elected by their peers
• judged by their peers
• punished with their peers