Money Crimes with Nicole Lapin - POLITICAL: Rod Blagojavich

Episode Date: January 23, 2025

Known as "Governor Sunshine," Rod Blagojevich dominated Chicago and Illinois politics in the late '90s and early 2000s. But something sinister lay behind the flashy smile. Despite promises of big change, Rod descended into a world of crime and corruption that ultimately landed him behind bars. Money Crimes is a Crime House Original. For more content, follow us on Instagram and TikTok @crimehouse. To learn more about listener data and our privacy practices visit: https://www.audacyinc.com/privacy-policy Learn more about your ad choices. Visit https://podcastchoices.com/adchoices

This is Crime House. Running for office is expensive. A career in politics means constant fundraising. And it's a lot easier to get people to give you money when they get something in return. Sometimes a politician might promise to support certain positions in exchange for campaign contributions. Maybe they make it clear that they'll block out a piece of legislation or make some specific budget proposals. But there's a big difference between these kinds of deals and outright bribery.

For most politicians, that difference is pretty clear, but eventually some of them step an inch over the line and it works out. So the next time they'll make it two inches past the line, then six inches, then a couple of feet. And before they know it, they're acting more like mobsters than elected officials. That's how a sitting governor of Illinois found himself trading his suit and tie for

a prison jumpsuit. Because Rod Blagojevich didn't just step over that line, He sprinted past it. As the saying goes, those who don't understand history are doomed to repeat it. That's especially true when it comes to money. If you want to make the right decisions when it comes to managing your assets, you need to know what mistakes to avoid and how to spot a trap. This is Money Crimes, a Crime House original. I'm your host, Nicole Lapin. Every Thursday, I'll be telling the story of a famous financial crime and giving you advice on how to avoid becoming a victim yourself.

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This episode is all about Rod Blagojevich, the brash-talking former governor of Illinois. In 2011, he was convicted on multiple corruption counts. Jurors found that he'd lied to the FBI, used his position as governor to shake down donors, and even tried to sell a US Senate seat. It all led to a lengthy prison sentence. But that doesn't mean his story is over. Calling all sellers, Salesforce is hiring account executives to join us on the cutting edge of technology. Here, innovation isn't a buzzword, it's a way of life.

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the best, yet fiercest part of herself. Based on the acclaimed novel, Nightbitch is a thought-provoking and wickedly humorous film from Searchlight Pictures. Stream Nightbitch January 24 only on Disney+. TD Direct Investing offers live support. So whether you're a newbie or a seasoned pro, you can make your investing steps count.

And if you're like me and think a TFSA stands for total fund savings adventure, maybe reach out to TD Direct Investing. Ron Blagojevich is known for his larger than life persona. He was so comfortable in the spotlight that you'd think he'd spent his entire life in the public eye. But his origins were actually quite humble. On December 10th, 1956, Rod, as his friends called him, was born in Chicago to Serbian-American parents.

His mom was born in the States, but his father had immigrated from Yugoslavia after the devastation of World War II left the country's economy in the gutter. So yeah, life in Chicago was a big improvement, but it still wasn't easy. Rod's father found work at a steel plant and later owned laundromats. His mom was a ticket taker at the Chicago Transit Authority. But two blue collar incomes weren't enough to support their family of four. So as a young kid, Rod started shining shoes, delivering pizzas, and even worked at a meat packing plant to help out. But Rod dreamed of doing more than scrubbing slaughterhouse floors. He wanted a better life for himself, specifically Elvis Presley's life. From the moment he first discovered the King,

Rod was a die-hard fan. He practiced Elvis's dance moves and styled his hair to look like Elvis, and even learned to sing his songs. But by the time he enrolled in Northwestern University in 1977, Rod had added a second role model to his list. Disgraced former president, Richard Nixon. Rod believed that Nixon got a raw deal from the media and the American public after Watergate. Bill Powell, a classmate and a friend of Rod's at Northwestern later told the New Yorker

that Rod related to Nixon's determination and lower middle class upbringing. And like Nixon, Rod went on to law school, studying at Pepperdine University in Malibu. Nowadays, Pepperdine is ranked as about the 50th best law school in America, out of around 250. So it's definitely not a bad place to be an aspiring lawyer. But Rod's focus wasn't on academics. Later in life, he claimed he barely knew where the law library was, and he used his poor grades as an example that

anyone could achieve their dreams. But despite spending more time on the beach than in the classroom, Rod managed to graduate, pass the bar, and even get a job as a prosecutor back home in Chicago. That's where he was in 1988, when 31-year-old Rod met the woman that would change his life. Patty Mel was the daughter of a powerful Chicago alderman, which is basically the equivalent of a very powerful city council member. The proverb, it's not what you know, it's who you know, is especially relevant to Chicago politics. And even more so when it comes to the alderman position, which has a, let's say, unique history. Starting in the mid-19th century, Chicago operated on what's known as aldermanic privilege.

Each alderman acted as the mayor of a miniature city within the city called a ward. Elected aldermen alongside officials appointed by political parties controlled everything from liquor licensing to street repairs. As you might imagine, concentrating power in such few hands led to a lot of corruption. If an alderman had your back, you could do just about whatever you wanted. So it was definitely worth making sure your local alderman considered you a friend. After Rod Blagojevich married Patty Mell in 1990,

he had a friend in his father-in-law. First elected in 1975, Alderman Richard Mell was considered an old-school political kingmaker, and he didn't want his daughter spending her life with an assistant state's attorney. If Rod was going to be part of the family, he had to get involved in politics, starting with a run for state representative in 1992. That was easier said than done, though. Rod was going up against a popular incumbent

who was widely expected to win. But Rod had Alderman Mel in his corner and his new father-in-law helped guide Rod to a surprising win. Inspired by his two favorite role models, Rod began crafting a unique political persona for himself. From Elvis, Rod took that rock star charisma. He reportedly visited dozens of bingo games to charm every senior citizen in his district into voting for him. From Nixon, he took the

dogged determination he so admired. One time, Rod physically followed a state senator until the senator finally stopped to chat with him. As Rod honed his political persona, he defended his state assembly seat in 1994. But he was already ready to do more. He complained to his driver that he was tired of helping people get license plates, and he wanted to be working on big issues. So in 1996, Rod ran for Congress. Once again, even though he wasn't the most experienced politician, he won.

That had a lot to do with his not-so-secret weapon, his father-in-law, Richard Mell. Pretty soon, Rod was riding in limousines with Bill Clinton and taking trips on Air Force One. He even used his Serbian heritage to get himself into the national spotlight, jetting off to Yugoslavia with the Reverend Jesse Jackson to negotiate the release of three American POWs. Serving as a translator between Jackson and the brutal dictator Slobodan Milosevic was complicated in more ways than one. Rod spent about half an hour struggling to explain the slang term homeboy in Serbian. But in the end, he helped free all three Americans and returned home from Yugoslavia a hero.

It was his first real taste of fame outside of Chicago. He left convinced that even Congress wasn't enough. He wanted to be in a position to make meaningful decisions. He wanted to be president of the United States. A decade later, Rod would be in the position to make a big decision and it would have a huge impact. But this decision wasn't about changing people's lives. It was about saving his own skin. In 2002, Rod Blagojevich took the next step in his career and ran for governor of Illinois.

took the next step in his career and ran for governor of Illinois. He campaigned as a reformer, promising to defeat corruption. That's a common political promise in Illinois, where four of the past ten governors have ended up in prison, including Rod's predecessor. It's practically a state tradition there. The challenger ends up winning by attacking the incumbentents corruption, then does the very same thing when he takes office. But enough people believed in Rod to make him the first Democratic governor of Illinois in 26 years. His cheerful disposition on the campaign trail and in office earned him the nickname Governor Sunshine. Which wasn't exactly a compliment. Sure, lots of people genuinely admired Rod's perpetual good mood.

But Illinois was facing a multi-billion dollar budget deficit. Rod had campaigned on the issue himself. He even fired a ton of state employees after taking office, supposedly to save money. And yet, he was spending around $6,000 a day to commute by private plane rather than move his family from Chicago to the governor's residence in Springfield. And when he attended the 2004 Democratic National Convention, Rod did so with a dozen taxpayer-funded bodyguards in tow, which was considered excessive for a sitting governor. So the moniker Governor Sunshine referred not only to Rod's ever-present smile, but to his treat-yourself attitude about spending during a financial crisis. He was eager to treat his campaign donors too.

And those donors got a lot of lucrative government contracts after Rod became governor. Awarding contracts to donors is one of the most common forms of political quid pro quo. The pitch goes something like this, give enough money to get me elected and I'll hire your company to do work for the state. And even though it may be common, it's not allowed.

To ensure fairness, each state has a scoring system for contract bids. But those scoring systems aren't totally subjective, which means they can be manipulated by unscrupulous politicians looking to get their campaign donors to get better scores. Most states allow no-bid contracts to be awarded in cases where a project is extra urgent or highly specialized. Like, hypothetically, if a bridge collapsed and only one construction company owned the right kind of equipment to repair it, the state could hire that company without looking at other bids. and only one construction company owned the right kind of equipment to repair it, the state could hire that company without looking at other bids. And if that company just so happened to be owned by a major campaign donor, it could be chalked up to a cosmic

coincidence. There's also a third kind of contract-related corruption, and it's what put Rod on the FBI's radar, leveraging private businesses into hiring campaign donors companies. In 2003, the Edward Hospital in Naperville, Illinois wanted to expand and that needed state approval. According to the hospital's CEO, Pam Davis, she was told that her expansion would not be approved unless she hired certain construction companies.

Those companies just so happened to have ties to some of Rod's biggest political contributors. But instead of just going along with this shakedown, Pam reported it to the FBI. It was a big accusation to make. Before the feds took any action, they needed more proof. So Pam agreed to wear a wire. Over an eight-month period, she recorded multiple conversations where she was pressured to hire specific contractors connected to the governor.

In 2004, the FBI finally had enough evidence to make a move. Rod was safe for the moment, but several people in his orbit were arrested. The FBI even confronted one of Rod's top campaign fundraisers, Tony Rescoe. Although Rescoe wasn't arrested right away, journalists were able to put two and two together. Rod Blagojevich seemed to be trading personal favors for political contributions. The scandal that followed was pretty bad,

but it was nothing compared to the storm that was brewing. A few months later, Rod's oldest ally turned on him, his own father-in-law, Alderman Richard Mel. Their falling out started when Rod's administration closed a landfill owned by a member of Mel's extended family. When Mel found out about that, he was pissed. In what seemed like an attempt to get back at Rod, he told a local paper that his son-in-law's administration was selling government appointments

for $50,000 campaign donations. The Mel Blagojevich alliance had been so successful, some political insiders didn't even believe their public feud was real. Illinois Republicans suspected the governor was staging a falling out with his father-in-law to pave the way for a future presidential campaign. Mel was associated with Chicago machine politics, so breaking with him would make Rod look principled. so breaking with him would make Rod look principled. But it wasn't staged. Richard and Rod were so mad at each other, they weren't even on speaking terms.

They wouldn't talk again for another seven years. And despite the personal nature of it all, the FBI took Alderman Mel's accusations seriously. They were already looking into the governor over the alleged hospital pressure campaign. And Mel's public jabs helped investigators zero in on another one of Rod's insiders, Christopher Kelly, one of his best friends and top aides.

Before Rod was elected governor, Kelly had raised $30 million for his campaign, and he wasn't shy about breaking rules to do it. One of Rod's former aides told Chicago Magazine that Kelly openly bragged about having a list of 30,000 state contractors who couldn't do business with the state unless they went through him. In other words, unless they made a donation to Rod's campaign. Kelly was a good old-fashioned shakedown artist. He also happened to be a high-rolling gambler.

During the same time when he was raising tens of millions of dollars for Rod, he was also reportedly racking up six-figure debts at casinos. He even dodged taxes to pay off his bookies. And he was gambling with more than just his own future. According to a later federal indictment, Kelly was willing to throw the state's teachers under the bus. In exchange for that $50,000 donation. He added certain wealth management companies to a list of firms approved

to manage the Illinois Teacher's Pension Fund. At least that's the FBI's side of the story. Unfortunately, we'll never get Christopher Kelly's side because he died by suicide in 2009 after pleading guilty to fraud and receiving a five-year prison sentence. Among his last words were quote, tell them they won, with them being the FBI. And Christopher Kelly wasn't the only person the FBI took down in Rod's corruption scheme. They were

coming after the governor himself. And it was only a matter of time until they caught him. Even with all the controversy swirling around his office, Rod Blagojevich coasted into a second term as governor of Illinois in November of 2006. And if he was nervous about getting caught up in it, he wasn't showing it. When asked about the allegations concerning the 2003 hospital shakedown, Rod told reporters,

"'We do things right and I'm not worried about anything.'" But in private, Rod was much more downbeat. On the night of his victory party, he complained to his aides about being stuck as governor for another four years while his allies abandoned him. On what should have been one of the best nights of his life, he was talking about feeling depressed and the FBI heard every word

because they were secretly wiretapping him. A lot of Rod's misery was self-inflicted. He'd alienated his father-in-law, Richard Mel, and invited criminals into his inner circle. But it was also circumstantial. Rod had gotten used to being the biggest name in Illinois politics. But in the past couple of years, he'd been upstaged when Barack Obama

burst onto the national scene. Obama had become a household name after a primetime speech at the 2004 Democratic National Convention. Since then, Obama and Blagojevich's trajectories were on opposite ends of the spectrum. While Obama was forming an advisory committee that would guide his 2008 presidential campaign, Blagojevich was trying to keep his advisors out of prison. Blindsided by Obama's meteoric rise and the

collapse of his inner circle, Blagojevich seemed to have lost his knack for politics. First, he proposed a massive tax increase that didn't get a single vote in the state house. And with the 2008 recession looming, he decided to give senior citizens free rides on mass transit. But he also closed multiple state parks to save money and possibly offset the costs of all of those free rides. It seemed like Rod was governing without a real plan. And by November of 2008, when Obama was elected president, Blagojevich's approval rating was just 13%.

That is even lower than Richard Nixon's 24% rating after the Watergate scandal. But Obama's success gave Blagojevich an interesting bargaining chip, maybe the best one he'd ever had. Under Illinois state law, when a U.S. Senate seat becomes vacant, the governor gets to appoint the new senator. So with Obama's seat open, Blagojevich was suddenly back in a position to make demands. President-elect Obama had his surrogates reach out with a suggestion.

Appoint Valerie Jarrett, a highly educated and well-respected Chicago political advisor and businesswoman. She also happened to be a close friend and early mentor to both Barack and Michelle Obama. Rod was willing to entertain it, but he wanted something in return, a position in Obama's cabinet.

Now, this is the kind of negotiating that is pretty common in politics, but considering Rod's reputation at this point, it was a non-starter. So Jarrett withdrew from consideration for the Senate seat and Rod moved on, but he wasn't done making demands. The FBI's wiretap caught Rod saying, I've got this thing and it's golden.

I'm just not giving it up for nothing. He was determined to get something out of the situation. But according to reports, everything Rod was proposing was a variation of what's known as pay to play. If you haven't heard the term before, pay to play basically means illegally offering a politician a benefit in exchange for a personal favor. Usually that benefit is money. That's why there's a lot of laws regulating donations

to campaign funds. But Ron was thinking bigger than campaign funds. He was reportedly looking to get a high paying job at a private nonprofit or to get his wife a corporate board seat. And after the FBI caught him talking about it on tape around December of 2008, they had enough evidence to charge him with all sorts of corruption charges. They originally wanted to wait a little longer to make their big arrest, but the Chicago Tribune had caught wind of the wiretapping of a sitting governor and were eager to run a story. So at 6 a.m. on December 9, 2008, the FBI showed up at Rod's house with an arrest warrant. The crack of John Wakeup Call was their way of being nice. Rod's daughters, who were nine and four at the time, would still be asleep. If they moved quickly and the governor cooperated, they would be in and out without even waking the girls up.

But Rod seemed to be in denial, even after federal agents barged into his living room. According to the FBI's investigators, he changed into a jogging outfit and even styled his hair before they took him to the local jail for booking. It seemed like the reality of the situation hadn't sunk in yet. When Rod's wife visited his holding cell to bring him a suit for his first court appearance, he stuck with his navy blue jogging gear instead. Inside the courtroom, he shook people's hands like he was back on the campaign trail. But he would never get anywhere near politics again. In 2009, Governor Rod Blagojevich was impeached

in the Illinois State House, convicted in the Illinois State Senate, and removed from office with a unanimous vote of 59 to zero. The State Senate also voted unanimously to ban Rod from ever running for state office again. But the man known as Governor Sunshine kept smiling through all of it. He was allowed to remain free while awaiting trial

and Rod used that time to go on the celebrity apprentice. He got fired in episode four, but even if he'd won, no amount of reality stardom could have kept him out of the courtroom. Ultimately, Rod was convicted of 13 corruption related crimes and sentenced to 14 years in prison. In 2012, he reported to Englewood, Colorado to serve his time in a low security facility.

But it doesn't seem like incarceration bothered him all that much. Rod tried to make the most of his time behind bars, even fronting a prison band called the Jailhouse Rockers. They specialized in Elvis covers, of course. And after eight years behind bars, he became a free man again. On February 18, 2020, outgoing President Donald Trump commuted the former governor's sentence to time search. Rod was released the very same day. Former President Trump didn't claim that Blagojevich was innocent. Rather, he felt the 14-year sentence was too harsh and that Rod's daughters didn't deserve to spend another six years without their dad. Since his release, Rod has taken a bunch of jobs you might not expect.

He appears as an Elvis impersonator now and then, offers his services as a motivational speaker, starred in a Hulu docu-series about his quest for redemption, and even sued to regain his eligibility to run for office. In March of 2024, a federal judge dismissed the suit in a strongly worded opinion, begging the former governor to stay out of public life. Rod Blagojevich's story shows us the murkiness of dealmaking in politics, especially when it comes to money. On one hand, the quid pro quo deals happen all the time.

You scratch my back and I'll scratch yours. That doesn't mean we have to like it. But a lot of the time, it doesn't break the law. Just take his attempt to get a cabinet seat in exchange for appointing Valerie Jarrett to the Senate. It might seem weird that you can basically get yourself a powerful job in exchange for a political favor, but there's no law that specifically forbids it. But on the other hand, you can't make deals for your own personal financial benefit. Whether it's extorting people for massive campaign contributions

or trying to profit off an open Senate seat, Rod Blagojevich put himself over his constituents. And despite how bright Governor Sunshine was, his positivity couldn't get rid of all the shadows around him. Thank you so much for listening. I'm your host, Nicole Appen. Money Crimes is a Crime House original powered by PAVE Studios. Join me every Thursday for a new episode.

Here at Crime House, we wanna thank each and every one of you for your support. If you like what you heard today, reach out on social media at Crime House on TikTok and on Instagram. Don't forget to rate and review and follow Money Crimes wherever you get your favorite podcasts. Your feedback truly makes all the difference. Money Crimes is hosted by me, Nicole Lapin, and is a Crime House original powered by Pave

Studios. It is executive produced by Max Cutler. This episode of Money Crimes was produced and directed by Ron Shapiro, written by Yelena War, edited by Natalie Persovsky, fact-checked by Sarah Tardiff, sound designed by Russell Nash, and included production assistance from Sarah Carroll.