7 page paper on George Ryan
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warnerryan.pdf
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES OF AMERICA ) No. 02 CR 506 ) ) Judge Rebecca Pallmeyer )
v. ) Violations: Title 18, United ) States Code, Sections 2, 1001
LAWRENCE E. WARNER and ) 1341, 1346, 1951, 1956 and 1962 GEORGE H. RYAN, SR. ) Title 26, United States Code
) Sections 7206 and 7212; and ) Title 31, United States Code, Section 5324 ) ) Second Superseding Indictment
COUNT ONE
The SPECIAL APRIL 2002 GRAND JURY charges:
1. At times material to this indictment:
Office of the Secretary of State
A. The Office of the Secretary of State of the State of Illinois (hereinafter “SOS
Office”) was entrusted with comprehensive duties relating to motor vehicles, including licensing
drivers, administering and enforcing driver safety, maintaining driving records, selling and
distributing license plates and vehicle registration validation stickers and issuing and maintaining
records of vehicle titles. In addition, the SOS Office, through its Inspector General Department
(hereinafter “IG Department”), was charged with investigating alleged misconduct by SOS Office
employees.
B. The Secretary of State, one of the elected statewide officers of the State of
Illinois, was responsible for running the SOS Office, the second largest of Illinois’ constitutionally-
mandated offices. From 1991 through early 1999, the SOS Office employed over 3,000 employees.
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C. The SOS Office performed its functions through approximately twenty-one
(21) departments, each of which was headed by a department director appointed by the Secretary
of State. Department directors reported, in most instances, to the Chief of Staff.
Office of the Governor
D. The Office of the Governor of the State of Illinois (hereinafter “Governor’s
Office”) was entrusted with comprehensive duties involving, among other things, appointing
department directors and key administrators; issuing Executive Orders; annually proposing a budget
and reporting on the fiscal condition of the state; supporting, approving and vetoing legislation; and
otherwise setting priorities and direction for the State of Illinois.
E. The Governor’s Office conducted its business through the staff of the
Governor’s Office and various departments which were managed by department directors, each of
whom reported to the Governor’s Office. In conjunction with the departments under its control, the
Governor’s Office comprised the largest of Illinois’ constitutionally-mandated offices.
F. The Governor of the State of Illinois, who was the chief executive of the
State of Illinois, was responsible for administration of all areas of the executive branch of state
government not under the authority of the other constitutionally-elected officials.
Racketeering Defendants
G. Defendant GEORGE H. RYAN, SR., was elected by the voters of the State of
Illinois to a four-year term as the Secretary of State in November 1990 and reelected to a second
four-year term in November 1994. Accordingly, RYAN was the Secretary of State from January
1991 through early January 1999. In November 1998, RYAN was elected by the voters of the State
of Illinois to a four-year term as the Governor of the State of Illinois. RYAN was the Governor from
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January 1999 through early January 2003.
H. Defendant LAWRENCE E. WARNER owned and operated several businesses
out of an office space at 3101 N. Western Avenue in Chicago, Illinois, including, among other
businesses: a fire insurance adjustment business named Lash Warner & Associates; a construction
maintenance and supervision business named Economy Building & Maintenance; and National
Consulting Company and Omega Consulting Group Ltd., two entities which were solely-owned and
operated by WARNER. In or about November 1990, defendant RYAN, then the Secretary of State,
appointed defendant WARNER as a member of the SOS Office Transition Team, which is further
described in paragraph 2(B) of Count Two below.
Other Individuals and Entities
I. Donald Udstuen: From the 1970s through approximately April 30, 2002,
Donald Udstuen was affiliated in various capacities with the Illinois State Medical Society, an entity
that, among other things, conducted lobbying activities for medical professionals in the State of
Illinois. From 1991 to April 30, 2002, Udstuen was the Chief Operating Officer for the Illinois State
Medical Insurance Exchange.
i. At times during defendant RYAN’s career as a candidate and elected
official, Udstuen served a number of roles to benefit RYAN, including serving as an advisor and
fundraiser for RYAN’s political campaigns.
ii. In or about January 1991, defendant RYAN, then the Secretary of
State, appointed Udstuen to be the co-chairman of the SOS Office Transition Team.
J. Associate 1: Beginning in approximately 1973 and continuing through
approximately December of 2002, Associate 1 was a lobbyist and consultant representing
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individuals and entities before the Illinois legislature and Illinois’ executive offices, including the
SOS Office and the Governor’s Office. As a lobbyist and on behalf of his clients, Associate 1 met
with officials in the legislative and executive branches of Illinois government, including defendant
RYAN, to promote and advance the positions of his clients.
K. Scott Fawell: In approximately February 1992, defendant RYAN, while
serving as Secretary of State, appointed Scott Fawell to be his Chief of Staff. In this capacity and
through in or about January 1999, Fawell, in conjunction with defendant RYAN, made personnel,
policy, strategic and business decisions binding the SOS Office. In addition, beginning no later than
February 1992 and continuing through early 1999, Fawell was a principal operating officer, adviser,
and decision maker for Citizens For Ryan, an entity described in paragraph 1(L) below. In this
capacity and through in or about January 1999, Fawell, in conjunction with defendant RYAN, made
personnel, policy, strategic and business decisions binding Citizens For Ryan. In or about January
1999, RYAN appointed Fawell to be the Chief Executive Officer of the Metropolitan Pier &
Exposition Authority, an agency that received a portion of its funding on an annual basis from the
Illinois General Assembly.
L. Citizens For Ryan: Citizens For George Ryan, Sr. (hereinafter “Citizens
For
Ryan”) was a private entity organized and existing under the laws of the State of Illinois as a state-
wide political campaign committee established on behalf of defendant RYAN to support his
campaign efforts. As a state political campaign committee, Citizens For Ryan was required to file
income and expenditure reports accurately and truthfully disclosing income and expenditure activity,
typically on a semi-annual basis, with the Illinois State Board of Elections, which reports were then
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available to the public. Prior to each filing, the income and expenditure activity was reviewed by
numerous Citizens For Ryan agents, including Fawell, and then verified for truth and completeness
by the treasurer of Citizens For Ryan at the time of filing.
i. Citizens For Ryan maintained one or more bank accounts at various
financial institutions in Illinois. Defendant RYAN, with the assistance of Fawell, possessed ultimate
control and decision-making authority over Citizens For Ryan bank accounts. Citizens For Ryan
also maintained one or more credit card accounts, and credit cards were issued to RYAN and Fawell,
who utilized said credit cards, along with funds from the Citizens For Ryan bank accounts, to pay
campaign and personal expenses of RYAN.
ii. From at least 1991 through 2002, defendant RYAN routinely used
Citizens For Ryan funds and credit cards to benefit himself, family members and other third parties.
Generally, Illinois law permitted the expenditure of campaign funds for personal purposes, provided
that the personal expenditures were reported as such on the campaign finance disclosure reports.
In addition, RYAN was required by law to accurately and fully report on his federal and state
income tax returns all expenditures of Citizens For Ryan funds for personal purposes.
iii. During each of the 1994 and 1998 political campaigns involving
defendant RYAN, RYAN caused substantial Citizens For Ryan funds to be set aside for personal
use in the event that the respective campaigns were unsuccessful. Generally, Illinois law further
permitted a former public official to use any outstanding balance in a campaign fund for personal
use, provided again that the former public official accurately and fully reported on his federal and
state income tax returns all such conversions of campaign funds.
iv. At all times between December 31, 1995 and May 2002, Citizens For
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Ryan bank account balances remained in excess of $1 million.
M. Alan A. Drazek: Alan A. Drazek owned and operated a company called
American Management Resources and was a personal associate of Donald Udstuen.
N. Associate 2: Through a real estate entity, Associate 2 owned a commercial
building in South Holland, Illinois, which, in May 1997, was leased to the SOS Office. Through an
entity called Seven Seas Villa, Associate 2 also co-owned a vacation home in Jamaica and
personally owned a home in Palm Springs, California.
O. Individual 1: A suburban Chicago businessman, Individual 1 met
defendant RYAN after RYAN became Secretary of State and had occasional contact with RYAN
and members of RYAN’s SOS Office staff.
Laws, Duties, Policies and Procedures Applicable to Defendant RYAN
2. Defendant RYAN, as an officer of the State of Illinois, was bound by the following
laws, duties, policies and procedures:
A. As Secretary of State and as Governor, defendant RYAN was a constitutional
officer and as such, at the outset of each term, was required to take an oath of office to support the
Constitution of the United States and the Constitution of the State of Illinois, and to faithfully
discharge the duties of the respective governmental office to the best of his abilities.
B. In his capacity as Secretary of State and Governor, defendant RYAN owed
a duty of honest services to the people of the State of Illinois and to the State of Illinois in the
performance of his public duties.
C. Pursuant to the criminal laws of the State of Illinois (720 ILCS 5/33-1(d)),
as
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Secretary of State and Governor, defendant RYAN was prohibited from receiving, retaining, or
agreeing to accept any property or personal advantage which he was not authorized by law to accept,
knowing that such property or personal advantage was promised or tendered with intent to cause him
to influence the performance of any act related to the employment or function of his public office.
D. Pursuant to the criminal laws of the State of Illinois (720 ILCS 5/33-3(c) and
(d)), as Secretary of State and Governor, defendant RYAN was prohibited from committing the
following acts in his official capacity: (1) performing an act in excess of his lawful authority, with
intent to obtain a personal advantage for himself or others; and (2) soliciting or knowingly accepting,
for the performance of any act, a fee or reward which he knew was not authorized by law.
E. Pursuant to the criminal laws of the State of Illinois (50 ILCS 105/3), as
Secretary of State and Governor, defendant RYAN was prohibited from being, in any manner,
financially interested, either directly or indirectly, in any contract or the performance of any work
in regard to which RYAN may have been called upon to act.
F. Pursuant to the criminal laws of the State of Illinois, including the Illinois
Governmental Ethics Act (5 ILCS 420/4A-101), as Secretary of State and Governor, defendant
RYAN was obligated to file annually a Statement of Economic Interest with the State of Illinois,
wherein he was required to disclose, among other things: (1) the name of any entity doing business
in the State of Illinois from which he derived income during the preceding calendar year in excess
of $1,200 (that is, income other than for specified professional services); (2) the identity of any
compensated lobbyist with whom he maintained a close economic association; and (3) the name of
any entity from which a gift or gifts valued singly or in the aggregate in excess of $500 was received
during the preceding calendar year. If defendant RYAN constructively controlled the interest
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described in (1) or (3) of a spouse or third party, he was obligated to disclose the interest as if it were
his own.
G. Pursuant to the criminal laws of the State of Illinois, including the Illinois
Gift Ban Act (5 ILCS 425/10), as Governor, except as otherwise provided by the Gift Ban Act,
defendant RYAN was prohibited from soliciting or accepting any gifts from any prohibited source
or in violation of any federal or state statute, rule or regulation. Prohibited sources included, among
others, anyone who was registered or required to be registered with the Secretary of State under the
Lobbyist Registration Act, described below. Beginning no later than early 1999 and continuing
through at least 2002, defendant RYAN, through certain personnel of the Governor’s Office,
maintained annual Gift Books, the purpose of which, among other things, was to log all gifts
received by then Governor RYAN and to monitor RYAN’s compliance with the Gift Ban Act.
H. Pursuant to Article VIII, Section 1(a) of the Constitution of the State of
Illinois, as Secretary of State and Governor, defendant RYAN was permitted to use public funds,
property and credit only for public purposes.
I. Political activity by state employees, including SOS Office employees, was
limited in the following respects: (1) pursuant to the laws of the State of Illinois (5 ILCS § 320/4)
no person was permitted to induce or persuade, or to attempt to induce or persuade, particular
categories of state employees to violate the restrictions against performing political activity during
regular working hours; (2) pursuant to laws of the State of Illinois (10 ILCS § 5/9-25.1), no public
funds could be used to urge an elector to vote for or against any candidate or proposition, or be
appropriated for political or campaign purposes to any candidate or political organization; and (3)
pursuant to the written SOS Office policies and procedures (Article 5), SOS Office employees were
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prohibited from (i) using state working time for personal gain or for any reason other than
performing their governmental duties; and (ii) participating in any political campaigning or activity
while on duty.
J. Beginning no later than August 26, 1997, pursuant to a written SOS Office
policy memorandum issued immediately following Executive Order #2 declared by the then-
Governor, all SOS Office employees, including RYAN, were prohibited from accepting any gifts,
meals or entertainment with a value of $50 or more annually from any single prohibited source. A
prohibited source was any person or entity who sought official action, did business or sought to do
business with the SOS Office, conducted activities regulated by the SOS Office or had interests that
could be substantially affected by the performance or non-performance of the employee’s official
duties. From at least August 1997 through 2002, defendant RYAN had a stated personal policy of
not accepting personal gifts whose value was in excess of $50.
Laws and Duties Applicable To Defendant WARNER
3. In performing certain alleged functions as set forth below, defendant WARNER was
bound by the following laws and duties:
A. Pursuant to the criminal laws of the State of Illinois (720 ILCS 5/33-1(c)),
defendant WARNER was prohibited from promising or tendering to a public official, with intent to
influence the performance of any official act, any property or personal advantage which the public
officer would not be authorized by law to accept.
B. Pursuant to the Lobbyist Registration Act (25 ILCS 170/1-170/12), which
became effective in or about January 1994, defendant WARNER was required to register with the
SOS Office as a lobbyist if he qualified under either of the following definitions: “(1) Any person
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who, for compensation or otherwise, either individually or as an employee or contractual employee
of another person, undertakes to influence executive, legislative or administrative action”; or “(2)
Any person who employs another person for the purposes of influencing executive, legislative or
administrative action.”
C. Pursuant to the Lobbyist Registration Act, defendant WARNER had an
obligation to disclose in annual statements filed with the SOS Office all expenditures related to
lobbying, and to itemize any expenditures over $100 made on behalf of, or benefits given to, any
legislative or executive branch official, including gifts and travel and entertainment expenses.
Federal Grand Jury Investigation
4. In or about the Spring of 1998, the SPECIAL JUNE 1997-2 Grand Jury sitting in
Chicago, Illinois, commenced grand jury investigation 98 GJ 596. Successive federal grand juries,
including the SPECIAL APRIL 2002 Grand Jury, continued the investigation into, among other
things, allegations of official misconduct, corruption and fraudulent conduct relating to the SOS
Office, the Governor’s Office and related entities and individuals (the “Grand Jury Investigation”).
A. On or about September 3, 1998, in furtherance of the Grand Jury
Investigation, federal law enforcement officers executed arrest warrants and search warrants,
interviewed numerous individuals and served grand jury subpoenas on SOS Office employees. As
a result of the arrests and related official proceedings that day, the existence of the Grand Jury
Investigation became known to the public, including defendant RYAN, no later than this date.
B. At various times between September 1998 and December 2003, the following
matters, among others, were material to the Grand Jury Investigation:
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Award of Contracts, Leases and Other Official Acts
i. Whether defendant RYAN awarded and authorized contracts, leases
and low-digit license plates and performed other official acts for the benefit of WARNER, Udstuen,
Associate 1, Associate 2, as well as others with personal relationships with RYAN (hereinafter,
collectively the “Associates”);
ii. Whether certain of the Associates provided any personal or financial
benefits or other things of value to defendant RYAN, RYAN’s family members or Citizens For
Ryan, for the purpose of influencing or rewarding RYAN in the course of performing or authorizing
any official act.
iii. Whether the offering or receipt of said things of value were concealed
through the actions of defendant RYAN and certain of the Associates.
Termination of IG Investigators and Reorganization of IG Department
iv. Whether the decision by RYAN and Fawell to terminate IG investigators
and reorganize the IG Department in June 1995 was made, at least in part, in order to conceal and
otherwise protect certain SOS Office employees’ political fundraising and other campaign activity
performed on behalf of Citizens For Ryan;
Diversion of SOS Office Resources To Benefit Political Efforts
v. Whether SOS Office employees, including defendant RYAN and Fawell,
authorized the diversion of SOS Office labor and resources in support of campaign activities
sponsored or promoted by RYAN, Fawell and Citizens For Ryan.
vi. Whether SOS Office officials took action to conceal the diversions of
SOS Office labor and resources, including taking actions after gaining knowledge of the existence
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of the Grand Jury Investigation.
C. As part of, and in conjunction with, the Grand Jury Investigation, defendant
RYAN was interviewed by federal law enforcement on matters material to the Grand Jury
Investigation on the following dates: January 5, 2000; July 6, 2000; October 16, 2000; and February
5, 2001.
The Enterprise
5. At all times material to this indictment, the State of Illinois constituted an
“Enterprise” as that term is defined in Title 18, United States Code, Section 1961(4), which was
engaged in, and the activities of which affected, interstate commerce.
6. Defendant RYAN was employed by and associated with the Enterprise, and
defendant WARNER was associated with the Enterprise.
Purposes of the Defendants
7. The purposes of the defendants included the following:
A. Performing official government acts; awarding government contracts and
leases and low-digit license plates; receiving payments relating to government contracts, and
otherwise utilizing the resources of the State of Illinois for the personal and financial benefit of
RYAN, RYAN’s family members, Citizens For Ryan, and certain of the Associates, including
defendant WARNER; and
B. Promoting, concealing and otherwise protecting purpose (A) of the
defendants from public exposure and possible criminal prosecution.
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The Racketeering Conspiracy
8. Beginning in approximately November 1990 and continuing to at least 2002, in
Chicago, in the Northern District of Illinois, Eastern Division, and elsewhere:
GEORGE H. RYAN, SR. and LAWRENCE WARNER,
defendants herein, and others known and unknown to the Grand Jury, being persons employed by
and associated with an enterprise engaged in, and the activities of which affected, interstate
commerce, namely, the Enterprise, did conspire with each other and others known and unknown to
the Grand Jury to violate Title 18, United States Code, Section 1962(c), that is, to conduct and
participate, directly and indirectly, in the conduct of the affairs of the Enterprise through a pattern
of racketeering activity involving multiple acts indictable under the following provisions of federal
law:
A. 18 U.S.C. § 1341 and 1346 (mail fraud);
B. 18 U.S.C. § 1956(a)(1)(A)(i), (a)(1)(B)(i) and (a)(1)(B)(ii) (money laundering);
C. 18 U.S.C. § 1951 (extortion);
D. 18 U.S.C. § 1503 and 1512 (obstruction of justice);
and multiple acts involving bribery chargeable under the following provisions of state law:
720 ILCS 5/33-1(c) and (d); and 5/33-3(d).
It was part of the conspiracy that the defendants agreed that a conspirator would commit at
least two acts of racketeering in the conduct of the affairs of the enterprise.
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Means and Method of the Conspiracy
9. It was part of the conspiracy that defendants RYAN and WARNER, as well as other
co-conspirators, engaged in a scheme to defraud the people of the State of Illinois and the State of
Illinois of money, property and the intangible right to the honest services of defendant RYAN, in
his capacity as a state official, and of other state officials, by means of materially false and
fraudulent pretenses, representations, promises and material omissions, as more fully described in
Count Two, paragraphs 2-148 of this indictment. Defendants RYAN, WARNER and certain other
Associates used and caused to be used the United States mails and other interstate carriers in
furtherance of the scheme.
10. It was further part of the conspiracy that defendant WARNER and other Associates
provided personal and financial benefits to, and for the benefit of, defendant RYAN, RYAN family
members, third parties affiliated with RYAN, and Citizens For Ryan, due to RYAN’s official
position, and for the purpose of influencing and rewarding RYAN in the exercise of RYAN’s official
authority.
11. It was further part of the conspiracy that defendant RYAN knowingly took actions
in his official capacity to benefit the personal and financial interests of defendant WARNER and
certain Associates while concealing, in violation of the law, RYAN’s financial relationship with
WARNER and certain Associates.
12. It was further part of the conspiracy that defendant RYAN knowingly permitted
defendant WARNER and certain Associates to participate in the governmental decision making
process, and provided WARNER and certain Associates with access to material, non-public
information relating to governmental decisions. With RYAN’s authority and concurrence,
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WARNER and certain Associates converted the participatory status and information provided by
RYAN into financial benefits for themselves, defendant RYAN and third parties.
13. It was further part of the conspiracy that defendants RYAN and WARNER, as
well as certain other conspirators, engaged in financial transactions designed, in whole or in part,
to conceal and disguise the nature, source, ownership, and control of the proceeds of the scheme,
including the structuring of cash withdrawals from bank accounts to avoid the filing of currency
transaction reports, the payment of funds to third parties who acted as conduits and nominees, and
the payment of cash and the writing of checks to cash.
14. It was further part of the conspiracy that defendant WARNER and others committed
and attempted to commit extortion, which extortion obstructed, delayed and affected commerce,
by knowingly obtaining and attempting to obtain property in the form of payments from vendors and
prospective vendors of the SOS Office induced by a) the wrongful use of actual and threatened fear
of economic harm, and b) under color of official right.
15. It was further part of the conspiracy that defendant RYAN, Fawell and other agents
of Citizens For Ryan diverted, and caused the diversion of, SOS Office labor and resources for the
personal and political benefit of defendant RYAN, Fawell and Citizens For Ryan.
16. It was further part of the conspiracy that defendant RYAN and Fawell acted to
terminate IG Department investigators and to reorganize the IG Department to, among other things,
discourage the legitimate investigation of improper political fundraising activities and related
official misconduct of SOS Office employees, and thus benefit RYAN personally and Citizens For
Ryan.
17. It was further part of the conspiracy that defendant RYAN and Fawell obstructed and
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attempted to obstruct the Grand Jury Investigation and otherwise misrepresented, concealed and hid,
and caused to be misrepresented, concealed and hidden, the purposes of and acts done in furtherance
of the conspiracy.
All in violation of Title 18, United States Code, Section 1962(d).
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COUNT TWO
The SPECIAL APRIL 2002 GRAND JURY charges:
1. The allegations in paragraphs 1–4 of Count One of this indictment are hereby
realleged and incorporated herein as if fully set forth herein.
2. At all times material to this count of the indictment:
A. The SOS Office had, among others, the following departments:
i. Vehicle Services Department: The Vehicle Services Department was
responsible for, among other things, the registration, licensure, and titling of vehicles. The Vehicle
Services Department also processed vehicle titles, registered vehicles, and issued license plates and
vehicle registration validation stickers.
ii. Driver Services Department: The Driver Services Department was
responsible for, among other things, testing applicants and issuing automobile and truck drivers’
licenses through over 130 driver's license facilities located throughout the State of Illinois. The
Property Management Division of the Driver Services Department was responsible for negotiating
and managing leases entered into with third parties relating to over 130 driver’s license facilities.
iii. Information Systems Services Department: The Information Systems
Services Department was responsible for, among other things, providing computer and office
automation services to all Departments in the SOS Office.
iv. Physical Services Department: The Physical Services Department was
responsible for, among other things, the maintenance and upkeep of certain buildings, including
among others, certain buildings leased by the SOS Office from outside individuals and entities, and
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all the buildings comprising the State Capitol Complex in Springfield, Illinois.
v. Index Department: The Index Department was responsible for,
among other things, administering and maintaining public records related to the registration,
activities and expenditures of lobbyists in the State of Illinois.
The SOS Office Transition Team
B. Beginning in or about late 1990, defendant RYAN, as the Secretary of State-
elect, chose a number of individuals, including defendant WARNER and Udstuen, to assist in the
planning of the RYAN SOS Office Administration (hereinafter the “SOS Office Transition Team”).
In particular, the SOS Transition Team was created to review the practices, procedures,
administration and duties of the SOS Office and to make recommendations to the newly-elected
Secretary of State for changes and improvements to the SOS Office. As part of that function, the
SOS Office Transition Team was provided access to SOS Office officials and employees, as well
as internal SOS Office documents and information not generally available to the public. Among
other things, the SOS Office Transition Team reviewed and made recommendations regarding issues
related to the SOS Office mainframe computer system, the installation of a new heating and cooling
system within the State Capitol Complex buildings, and the status and options relating to one or
more SOS Office real property leases. The SOS Office Transition Team issued a report in or about
March 1991.
C. In addition to serving as a member of the SOS Office Transition Team and
after the work of the Transition Team was completed in or about March 1991, WARNER, with the
knowledge and authorization of RYAN, attended internal SOS Office meetings, including policy
meetings and one or more staff retreats; occasionally performed private work inside the
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governmental offices of RYAN; directed and advised SOS Office personnel, including one or more
department directors, regarding matters related to the award of SOS Office contracts to vendors and
the award of SOS Office real property leases; and assisted in determining the content of official SOS
Office documents and communications, including specifications related to one or more SOS Office
contracts with vendors.
The Scheme To Defraud
3. Beginning in approximately November 1990 and continuing to at least 2002, in the
Northern District of Illinois, Eastern Division, and elsewhere:
GEORGE H. RYAN, SR. and LAWRENCE WARNER,
defendants herein, as well as Associate 1, Donald Udstuen, Scott Fawell, Citizens For Ryan and
others known and unknown to the Grand Jury, devised and intended to devise, and participated in,
a scheme and artifice to defraud the people of the State of Illinois, and the State of Illinois, of
money, property and the intangible right to the honest services of defendant RYAN and other
officials and employees of the State of Illinois, by means of materially false and fraudulent
pretenses, representations, promises and material omissions, and in furtherance thereof used the
United States mails and other interstate carriers, which scheme is further described in the following
paragraphs:
Overview of Scheme
4. It was part of the scheme that defendant RYAN performed and authorized official
actions to benefit the financial interests of RYAN, defendant WARNER, Associate 1, Associate 2
and certain Associates and designated third parties, including RYAN family members and Citizens
For Ryan. The official actions RYAN performed and authorized included:
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A. Awarding, and authorizing the award of, contracts and leases, and intervening in governmental processes related thereto and causing contractual payments to be made to benefit the financial interests of defendant WARNER, as described below;
B. Providing defendant WARNER and Associate 1 with participatory status in, and material non-public information relating to, governmental decisions, which WARNER and Associate 1 then converted into financial benefits for themselves, defendant RYAN and third parties, as described below.
C. Awarding a real property lease and causing contractual payments to be made to benefit Associate 2, as described below;
D. Awarding, and authorizing the award of, contracts and intervening in governmental processes related thereto in order to benefit the financial interests of Associate 1, as described below; and
E. Awarding, and authorizing the award of, low-digit license plates to WARNER, Individual 1, and others, as described below.
5. It was further part of the scheme that defendant RYAN and certain third parties
affiliated with RYAN received personal and financial benefits from defendant WARNER, Associate
1 and certain Associates, while defendant RYAN knew that such benefits were provided with intent
to influence and reward RYAN in the performance of official acts. Such benefits included, but were
not limited to, the following:
A. Monetary payments and gifts on multiple occasions to defendant RYAN which payments and gifts exceeded the $50 threshold;
B. Vacation benefits to defendant RYAN;
C. Personal service benefits to defendant RYAN;
D. Monetary payments, loans, gifts and personal service benefits to RYAN’s family members;
E. As directed and approved by defendant RYAN, the allocation and distribution to designated Associates of proceeds obtained from vendors doing business with the State of Illinois;
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F. Financial support, in the form of loans to benefit Comguard, a private company which had financial troubles throughout the 1990s and which defendant RYAN supported in its efforts to obtain State of Illinois contracts for electronic monitoring of prisoners. Comguard was owned, in part, by a RYAN family member;
G. Forebearance on loans to a RYAN family member and to Comguard; and
H. Financial benefits to Citizens For Ryan, some of which benefits were converted to RYAN’s personal use.
6. It was further part of the scheme that, from the early 1990s to at least 2002,
defendants RYAN, WARNER and certain Associates concealed their financial relationships with
each other by, among other things:
A. RYAN knowingly failing to disclose gifts, financial benefits and things of value he received from WARNER and the other Associates as required by law and policy;
B. RYAN making false statements to federal investigators regarding his financial relationship with WARNER, Associate 2 and Individual 1;
C. WARNER and certain Associates knowingly i) filing, and causing the filing of, materially false lobbyist registration statements and related disclosure documents, and ii) failing to file lobbyist registration statements and related disclosure documents; and
D. WARNER and certain Associates structuring withdrawals, paying funds to third parties who served as conduits and nominees, making payments in cash, writing checks to cash and otherwise concealing financial transactions.
Authorizing Official Actions Related To WARNER and Udstuen
7. It was part of the scheme that, in or about early 1991, defendant WARNER and
Udstuen discussed a plan to make money from one or more vendors doing business with the SOS
Office and prospective vendors desiring to do business with the SOS Office.
8. It was further part of the scheme that, beginning in or about 1991 and continuing
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thereafter, defendant WARNER advised Udstuen that, with defendant RYAN’s knowledge and
approval, WARNER would provide Udstuen with one-third of the proceeds that WARNER obtained
from certain vendors doing business with the SOS Office, as a reward for Udstuen’s past service to
defendant RYAN. Thereafter, defendant WARNER did provide Udstuen with one-third of the
proceeds that WARNER obtained from American Decal Manufacturing (hereinafter “ADM”) and
International Business Machines (hereinafter “IBM”), as described below, even though Udstuen
performed minimal or no services to earn said proceeds.
9. It was further part of the scheme that, in or about 1991, defendant WARNER and
Udstuen agreed that in order to conceal the flow of proceeds from WARNER to Udstuen related to
the SOS Office vendors, defendant WARNER would use Alan Drazek's company, American
Management Resources, as a conduit for the purpose of passing payments from WARNER to
Udstuen relating to ADM and IBM, as described below. WARNER agreed to issue checks to
Drazek, who in turn would provide a substantial portion of the proceeds relating to ADM and IBM
back to Udstuen in cash.
10. It was further part of the scheme that, in or about early 1991, defendant WARNER
told Udstuen that WARNER would be “taking care” of defendant RYAN with WARNER’s two-
thirds share of the proceeds that he obtained from the vendors doing business with the SOS Office.
11. It was further part of the scheme that, beginning in the early 1990s and continuing
thereafter through at least early 1999, WARNER provided personal and financial benefits to and
for the benefit of defendant RYAN, including, but not limited to the following:
A. Monetary payments and gifts on multiple occasions to defendant RYAN which payments and gifts exceeded the $50 threshold;
B. Personal and professional service benefits to defendant RYAN;
22
C. Over $300,000 in payments to Udstuen relating to ADM and IBM’s contractual dealings with the SOS Office, as directed and approved by defendant RYAN based on Udstuen’s past service to RYAN;
D. Two loans totalling $145,000 related to Comguard, and forebearance on one of the loans;
E. A $5,000 no-interest loan for the benefit of a RYAN family member and forebearance on that loan;
F. Significant financial expenditures (in excess of $3,000) relating to the 1997 wedding of a RYAN family member;
G. Over $6,000 in financial investments in a RYAN family member’s business;
H. Over $7,000 in non-compensated professional services to a RYAN family member;
I. Financial benefits to Citizens For Ryan.
12. It was further part of the scheme that defendant RYAN concealed the personal and
financial benefits he received from defendant WARNER in violation of the law and his stated policy.
13. It was further part of the scheme that defendant WARNER financially benefitted
from the following contracts and leases for which defendant RYAN took and authorized official
action:
The Awarding Of The Validation Stickers Contracts To ADM
14. At times material to this indictment:
A. The SOS Office Contract Award Process: In the performance of its lawful
functions, the SOS Office awarded contracts for goods and services to outside entities and
individuals (hereinafter collectively “vendors”). As to certain contracts, the particular SOS Office
Department seeking to obtain the goods and services was generally responsible for drafting contract
“specifications” which described, among other things, the technical requirements a bidding company
23
had to meet in order to win the contract. To initiate the process, contract specifications were
forwarded from the SOS Office to the Illinois Department of Central Management Services
(hereinafter “Central Management Services”), a state agency independent from the SOS Office that
handled certain aspects of the purchasing and procurement process for other state agencies,
including the SOS Office. After receiving contract specifications from the SOS Office, Central
Management Services generally solicited bids from vendors based upon the requirements set forth
in the SOS Office specifications. The vendors wishing to bid on a contract had to submit those bids
directly to Central Management Services, which in turn would share the bid information with the
SOS Office.
B. The Validation Stickers Contract: The SOS Office periodically awarded a
contract to manufacture and print vehicle registration validation stickers, which were the stickers
required to be affixed to all Illinois license plates to show current vehicle registration (hereinafter
the “validation stickers contract”). The Vehicle Services Department was generally responsible for
preparing specifications and, along with Central Management Services, overseeing the competitive
bidding process for the validation stickers contract. Up to and including 1991, the validation
stickers contract, which cost the State of Illinois approximately $800,000 to $1,200,000 annually,
was held by ADM.
C. At no point prior to 1991 had ADM made payments to any third parties to
receive or keep the validation stickers contract. As of 1991, the existing SOS validation stickers
contract with ADM included the requirement of a feature known as the “metallic security mark,”
which feature was a product created and manufactured by ADM and this requirement had the effect
of substantially guaranteeing the award of the validation stickers contract to ADM.
24
15. It was further part of the scheme that, beginning in about July 1991 and continuing
thereafter, defendant WARNER made unsolicited contacts with officials of ADM and indicated to
them that, in exchange for monthly payments, WARNER would ensure that the “metallic security
mark” requirement would remain in the specifications for the SOS Office validation stickers
contract.
16. It was further part of the scheme that defendant WARNER threatened one or
more officials of ADM, stating if ADM did not pay WARNER the monthly payment amount,
WARNER would cause the specifications to change such that ADM would lose the validation
stickers contract. As a result of WARNER's statements and out of fear that ADM might otherwise
lose the validation stickers contract, officials of ADM authorized monthly payments to WARNER
in amounts dictated by WARNER.
17. It was further part of the scheme that, beginning in or about July 1991 and continuing
thereafter, defendant WARNER directed a high-ranking official of the Vehicle Services Department
(hereinafter “SOS Official A”) to take certain actions to financially benefit WARNER.
Understanding that WARNER was acting with the authority of RYAN, SOS Official A followed
WARNER’s directions.
18. It was further part of the scheme that, in or about April 1992, defendant RYAN told
SOS Official A that he did not want SOS officials getting too close to a Minnesota-based company,
3M, which was a potential competitor to ADM in the validation sticker contracts.
19. It was further part of the scheme that, in or about late 1992, after SOS Official A
failed to respond promptly to defendant WARNER’s contacts on official SOS Office matters,
defendant RYAN contacted SOS Official A and inquired as to why SOS Official A was not
25
returning WARNER’s calls. When SOS Official A informed RYAN that he was uncomfortable with
Warner because Warner was frequently intervening in his SOS Office job and manipulating SOS
contracts, RYAN told SOS Official A, among other things, that WARNER was Official A’s “friend”
and directed Official A to return defendant WARNER’s calls.
20. In or about 1993, the Vehicle Services Department conducted research and
analysis regarding the security features of the validation stickers contract, and a committee
consisting of approximately seven Vehicle Services Department employees unanimously
recommended to SOS Official A that the “metallic security mark” requirement be removed from the
specifications for the validation stickers contract. Shortly thereafter, SOS Official A, acting on the
committee’s recommendation, caused the “metallic security mark” requirement to be removed from
the specifications and the modified specifications to be forwarded to Central Management Services
for initiation of the competitive bidding process.
21. It was further part of the scheme that, in or about 1993, after SOS Official A had
caused the “metallic security mark” requirement to be removed from the specifications following
the committee’s recommendation in order to enhance the SOS Office’s options in selecting a cost-
effective qualified vendor, defendant WARNER directed SOS Official A to put back into the
specifications the requirement for the “metallic security mark.”
22. It was further part of the scheme that, in or about April 1993, defendant RYAN
intervened to assist defendant WARNER in his efforts on behalf of ADM by, among other things,
directing SOS Official A to change the specifications back to include the “metallic security mark”
to benefit ADM. RYAN further directed SOS Official A to retrieve the specifications back from
CMS quietly, and SOS Official A did so, such that ADM was advantaged. Thereafter, and as a
26
result of RYAN’s conduct, SOS Official A made no effort to revise the specifications, and the
validation stickers contract thereafter continued to be awarded to ADM.
23. It was further part of the scheme that, with defendant RYAN’s assistance, from about
1991 through approximately 2000, the SOS Office continued to make payments to ADM under the
validation stickers contracts authorized by defendant RYAN’s SOS Office. During this period,
defendant WARNER received approximately $332,000 in payments from ADM related to the
validation stickers contracts. After receiving the payments, WARNER, with RYAN’s approval,
provided Udstuen one-third of the proceeds through payments made through American Management
Resources, as described above.
The Awarding Of The Title Laminates Contract To ADM
24. At times material to this indictment:
The SOS Office periodically awarded a contract to manufacture and print laminated
strips to be affixed to vehicle titles for security purposes (hereinafter the “title laminates contract”).
The Vehicle Services Department was generally responsible for preparing the specifications and,
along with Central Management Services, overseeing the competitive bidding process for the title
laminates contract. Up to and including 1991, the title laminates contract was held by 3M.
25. It was further part of the scheme that, in about August 1991, defendant WARNER
told an official of ADM that in exchange for $67,000, WARNER would cause the SOS Office title
laminates contract, then held by 3M, to be awarded to ADM. Based upon WARNER’s statements,
ADM authorized total payments of $67,000 to WARNER.
26. It was further part of the scheme that, in about August 1991, at the direction of
defendant WARNER, and understanding that defendant WARNER was acting with the authority
27
of defendant RYAN, SOS Official A took official actions to materially benefit ADM and to the
competitive disadvantage of 3M.
27. It was further part of the scheme that, as a result of defendant WARNER’s actions, the
SOS Office awarded the title laminates contract to ADM, which thereafter received the title
laminates contracts through approximately September 1998.
The Awarding Of Computer-Related Contracts To IBM
The Mainframe Computer Upgrade Contract
28. At times material to this indictment:
A. The SOS Office awarded contracts to provide computer and information
technology services related to SOS Office functions, including among other contracts, contracts
related to installing and maintaining a mainframe computer system used throughout the SOS Office
(hereinafter, the “mainframe computer upgrade contract”). The Information Systems Services
Department was generally responsible for preparing the specifications and overseeing the
competitive bidding process for the mainframe computer upgrade contract and other computer-
related SOS Office contracts.
B. As of early 1991, Honeywell/Bull (hereinafter “Honeywell) held the existing
mainframe computer system contract with the SOS Office and was attempting to ensure that it would
win future computer-related contracts with the SOS Office, including the prospective mainframe
computer upgrade contract. As of no later than 1992, International Business Machines (hereinafter
“IBM”) desired to win future computer-related contracts with the SOS Office, including the
prospective mainframe computer upgrade contract.
29. It was further part of the scheme that, beginning in or about early 1991, due to
28
defendant RYAN providing defendant WARNER and Udstuen with participatory status in, and
material non-public information relating to, governmental decisions, WARNER and Udstuen learned
information pertaining to the SOS Office’s intentions regarding the mainframe computer upgrade
contract.
30. It was further part of the scheme that, in or about the summer of 1991, defendant
WARNER and Udstuen, and later Associate 1, met with representatives of Honeywell. During the
meetings, WARNER and Udstuen, and later Associate 1, indicated that in exchange for total
payments of up to $1,000,000 from Honeywell, Honeywell would be awarded one or more
computer-related contracts with the SOS Office, including the prospective mainframe computer
upgrade contract.
31. On or about September 24, 1991, after Honeywell declined to pay defendant
WARNER, Udstuen or Associate 1 to ensure the award of SOS Office contracts, Honeywell's
representative reported WARNER, Udstuen and Associate 1’s solicitation activities personally to
defendant RYAN.
32. It was further part of the scheme that, at the September 24, 1991 meeting with
Honeywell’s representative, defendant RYAN acknowledged, among other things, that Udstuen and
WARNER were among his advisors, that RYAN had too much to lose to allow something like the
alleged conduct involving Udstuen and WARNER go on in his Administration and that RYAN
would “get to the bottom of it.”
33. It was further part of the scheme that, after defendant RYAN had been informed of
WARNER and Udstuen’s solicitations relating to Honeywell, defendant RYAN authorized
WARNER and Udstuen to assist in the process of hiring a Director of the Information Systems
29
Services Department whose responsibilities included, among other things, assisting in the selection
and implementation of the mainframe computer upgrade contract.
34. It was further part of the scheme that, when Udstuen was approached for a lobbyist
referral for IBM relating to potential business with the SOS Office, Udstuen referred IBM to
defendant WARNER, knowing that Udstuen would profit with WARNER on any business that IBM
performed with RYAN’s SOS Office.
35. It was further part of the scheme that, in or about February 1992, defendant
WARNER and Udstuen interviewed a candidate for the Director position (hereinafter “SOS Official
B"), and, during the interview process, SOS Official B disclosed that Official B would be supportive
of selecting IBM for the mainframe computer upgrade contract. Shortly thereafter, WARNER and
Udstuen recommended to RYAN that the SOS Office hire SOS Official B as the Director of the
Information Services Department, and RYAN then hired SOS Official B for the position as Director
of Information Services.
36. It was further part of the scheme that, in approximately March 1993, defendant
WARNER entered a written contract with IBM, retroactive for services beginning July 1, 1992, and
under which IBM agreed to pay WARNER a percentage of all revenues, up to $1,000,000, that were
received by IBM in connection with SOS Office contracts.
37. It was further part of the scheme that, on one or more occasions, at the direction of
defendant WARNER, and understanding that defendant WARNER was acting with the authority
of defendant RYAN, SOS Official B took official actions to benefit WARNER financially relating
to IBM.
38. It was further part of the scheme that, based, at least in part, on the actions taken by
30
defendant WARNER, defendant RYAN awarded the mainframe computer upgrade contract to IBM,
which contract payments made during RYAN’s SOS Office Administration exceeded $25,000,000.
The Kiosk Project Contract
39. At times material to this indictment:
A. Commencing in or about 1995, the SOS Office began to consider a pilot
project using computerized kiosks within certain SOS license facilities to allow citizens to renew
vehicle registration, obtain validation stickers and perform other vehicle titling and related
registration.
B. On or about April 24, 1995, a high-ranking SOS Office official who
supported the use of kiosks (hereinafter “SOS Official C”), notified defendant RYAN and Fawell
in writing that there was an opportunity for the SOS Office to view kiosk demonstrations by several
vendors at an upcoming event in Columbus, Ohio.
40. It was further part of the scheme that defendant RYAN, defendant WARNER
and Fawell travelled to Columbus, Ohio, to attend the kiosk demonstrations, including
demonstrations made by IBM and a competing vendor. SOS Official B, SOS Official C, and a
representative of the competing vendor also attended the kiosk demonstrations.
41. After returning from the April 25, 1995 trip, SOS Official C recommended to other
officials of the SOS Office that the kiosk project contract should be awarded to the competing
vendor and not IBM.
42. It was further part of the scheme that, after SOS Official C made the
recommendation
opposing IBM's selection, Udstuen, at defendant WARNER’s request, directed SOS Official C to
31
drop Official C’s opposition to IBM's selection. Understanding that WARNER and Udstuen acted
with the authority of defendant RYAN, SOS Official C did as Udstuen advised.
43. It was further part of the scheme that, due at least in part to defendant WARNER
and Udstuen’s actions, in or about January 1996, defendant RYAN selected IBM for the kiosk
project contract.
44. It was further part of the scheme that, from in or about 1993 through early 1999,
defendant WARNER received approximately $1,000,000 in payments under his contract with IBM,
principally related to the mainframe computer upgrade contract. WARNER, in turn, directed one-
third of the proceeds to Udstuen, through American Management Resources.
45. It was further part of the scheme that, in or about 2000, after defendant WARNER
and Udstuen learned that federal investigators were inquiring into matters relating to WARNER,
WARNER and Udstuen discussed how they could further conceal the flow of proceeds that Udstuen
received from WARNER.
46. It was further part of the scheme that defendant WARNER filed false and misleading
lobbyist registration statements relating to IBM and failed to disclose all his RYAN-related
expenditures.
Awarding of Digital Licensing Contract To Viisage Technologies
47. At times material to this indictment:
A. In approximately 1996, the SOS Office began an initiative to switch to a
digital licensing system through which all State of Illinois automobile and truck drivers' licenses
would be created and maintained through digital technology. The Drivers Services Department was
generally responsible for preparing the specifications and overseeing the competitive bidding
32
process related to awarding a contract for digital licensing services.
B. In approximately June 1997, the SOS Office awarded the contract to provide
digital licensing and related services for the State of Illinois through approximately 2004 (hereinafter
the “digital licensing contract”) to Viisage Technologies, a Massachusetts-based company
(hereinafter “Viisage”).
48. It was further part of the scheme that, in about August 1996, due to defendant RYAN
providing defendant WARNER with participatory status in, and material non-public information
relating to, governmental decisions, WARNER learned that the SOS Office was evaluating the
merits of switching to a digital licensing system and that a high-ranking SOS Office official who
would have a role in the implementation of the system (hereinafter “SOS Official D”) preferred
Viisage.
49. It was further part of the scheme that, in or about October 1996, defendant
WARNER, working with another individual, agreed with Viisage to enter into a lobbying contract
to assist Viisage in its efforts to obtain the digital licensing contract with the SOS Office, in return
for a percentage of all gross revenues received should Viisage receive the digital licensing contract
(the “lobbying contract”).
50. It was further part of the scheme that, in order to conceal defendant WARNER’s
involvement with Viisage in the lobbying contract for the digital licensing contract, WARNER
caused his name to be excluded from the initial lobbying contract, even though WARNER was to
be the principal lobbyist for Viisage.
51. It was further part of the scheme that, in or about December 1996, before the SOS
Office commenced the bidding process on the digital licensing contract, defendant WARNER
33
guaranteed Associate 1 payments totalling $36,000 in 1997 relating to Viisage if Associate 1 agreed
to assist WARNER on behalf of Viisage. WARNER further indicated that the “cash flow” on the
yet-to-be-awarded contract might not commence until mid-1997.
52. It was further part of the scheme that, due to defendant RYAN providing defendant
WARNER with participatory status in, and material non-public information relating to the award
of the digital licensing contract, prior to the award of the digital licensing contract to Viisage,
defendant WARNER purchased Viisage stock and advised another SOS Office employee to
purchase Viisage stock in order to profit from the SOS Office’s subsequent decision to award the
digital licensing contract to Viisage.
53. It was further part of the scheme that, on or about June 2, 1997, after bids were
received from two entities, defendant RYAN awarded the digital licensing contract to Viisage.
54. It was further part of the scheme that, shortly after defendant RYAN awarded the
digital licensing contract to Viisage, defendant WARNER caused the financial interest in the
lobbying contract with Viisage to be assigned explicitly to WARNER’s business. Thereafter,
between approximately 1999 and November 2002, defendant WARNER received approximately
$800,000 in revenues related to the lobbying contract, via the United States mails.
55. It was further part of the scheme that, beginning in approximately 1999, defendant
WARNER paid Associate 1 $36,000 from WARNER’s Viisage proceeds, even though Associate
1 performed no services on behalf of Viisage.
56. It was further part of the scheme, and in order to conceal the scheme, that defendant
WARNER and Associate 1 knowingly failed to register as lobbyists for Viisage.
The Awarding Of The Automated System Consulting Contract To ATC
34
57. At times material to this indictment:
In approximately 1991, the SOS Office began an initiative to install an automated
heating and cooling system for certain State Capitol Complex buildings in Springfield, Illinois. The
Physical Services Department was generally responsible for preparing the specifications and
overseeing the competitive bidding process related to the automated heating and cooling system.
To facilitate that process, beginning in about early 1992 and continuing through about October 1994,
the SOS Office sought to award a series of engineering consulting contracts for assistance with
preparing the specifications and consultations with regard to the contractual process related to the
automated heating and cooling system (hereinafter collectively the “automated system consulting
contract”).
58. It was further part of the scheme that, in or about 1991, due to defendant RYAN
providing defendant WARNER with participatory status in, and material non-public information
relating to, governmental decisions, WARNER learned that the SOS Office was seeking to award
the automated system consulting contract to an outside consultant.
59. It was further part of the scheme that, in or about December 1991, defendant
WARNER solicited a Northbrook-based company, Affordable Temperature Control (“ATC”) to
provide consulting services under the SOS Office's automated system consulting contract. ATC
agreed to provide the services.
60. It was further part of the scheme that defendant WARNER contacted a high-ranking
official in the Physical Services Department (hereinafter “SOS Official E”) and told SOS Official
E that WARNER had identified a contractor to receive the automated system consulting contract.
Understanding that defendant WARNER was acting with the authority of defendant RYAN, SOS
35
Official E followed WARNER’s direction and caused ATC to be awarded the automated system
consulting contract.
61. It was further part of the scheme that, from about January 1992 through October
1994, ATC received payments from the SOS Office for services related to the automated system
consulting contract.
62. It was further part of the scheme that, after ATC had been awarded and begun work
under the automated system consulting contract, defendant WARNER contacted ATC and indicated
he wanted 8% of ATC's revenues under the automated system consulting contract.
63. It was further part of the scheme that between about June 1992 and October 1994,
defendant WARNER received approximately $8,240 in payments from ATC related to the
automated system consulting contract.
64. It was further part of the scheme that Fawell caused to be maintained and updated
a confidential “master list” which was used to track and monitor official acts that the SOS Office
had performed on behalf of, or relating to, a particular “sponsors,” such as defendant WARNER.
On the master list, Fawell caused WARNER to be listed as the “sponsor” for ATC's selection for
the automated system consulting contract.
Soliciting Modern Business Systems Relating to SOS Office Photocopier Leases
65. At times material to the indictment:
The SOS Office entered into leases with one or more vendors for the use and the
service of photocopier machines at SOS Offices (hereinafter “the photocopier leases”). Each SOS
Office Department seeking to use a photocopier within that Department was generally responsible
for negotiating the terms and conditions of the photocopier leases. Up to and including 1991,
36
Modern Business Systems, Inc. held several of the photocopier leases with the SOS Office.
66. It was further part of the scheme that, in or about mid-1991, due to defendant RYAN
providing defendant WARNER with participatory status in, and material non-public information
relating to, governmental decisions, WARNER learned that Modern Business Systems, Inc., which
then held certain of the SOS Office photocopier leases, was attempting to win future additional
leases with the SOS Office.
67. It was further part of the scheme that, on about July 16, 1991, defendant WARNER,
representing he was an agent of the SOS Office, solicited Modern Business Systems, Inc. to make
$2,000 per month payments to WARNER personally, in return for WARNER guaranteeing that
Modern Business Systems, Inc. would be awarded additional business with the SOS Office. An
official with Modern Business Systems, Inc. declined.
Awarding Real Property Leases To Warner-Controlled Entities
68. At times material to the indictment:
A. The SOS Office awarded leases of real property, including certain
buildings owned by outside individuals and entities. The Physical Services Department was
responsible for negotiating particular SOS Office real property leases and overseeing the
maintenance and upkeep related to said leases.
B. The Property Management Division of the Drivers Services Department was
responsible for negotiating leases at drivers license facilities and overseeing the maintenance and
upkeep related to said leases.
17 N. State Lease
69. It was further part of the scheme that, in approximately early 1991, due to defendant
37
RYAN providing defendant WARNER with participatory status in, and material non-public
information relating to, governmental decisions, WARNER learned that the SOS Office was
seeking to relocate certain of its administrative office facilities then located at 188 W. Randolph
Street in Chicago.
70. It was further part of the scheme that, in approximately April 1991, defendant
WARNER spoke with an individual associated with a building at 17 N. State Street in Chicago,
Illinois (hereinafter “Property Manager 1").
71. It was further part of the scheme that, in or about April 1991, defendant WARNER
caused a contract to be entered into with Property Manager 1, giving WARNER a 6% commission
interest in any SOS Office lease relating to the 17 N. State Street building (hereinafter the
“commission contract”).
72. It was further part of the scheme that defendant WARNER concealed his financial
interest in the commission contract with Property Manager 1 by omitting his name from the
commission contract and causing the commission contract to be executed by a third party, who had
no involvement in facilitating a lease of the 17 N. State property.
73. It was further part of the scheme that, in or about mid-1991, defendant WARNER
contacted an SOS Office employee responsible for identifying relocation sites for the operations then
located at 188 W. Randolph (hereinafter “SOS Official F”), and directed SOS Official F to contact
Property Manager 1. Understanding that WARNER was acting with defendant RYAN’s authority
and unaware of WARNER’s interest in the commission contract, SOS Official F did as WARNER
directed.
74. It was further part of the scheme that, on or about October 22, 1991, defendants
38
RYAN and WARNER caused the SOS Office to enter a six-year lease for use and occupancy of the
building at 17 N. State Street in Chicago (hereinafter “the 17 N. State Lease”). Thereafter, in or
about early 1998, RYAN’s SOS Office agreed to renew the 17 N. State Lease for an additional six-
year term, with WARNER receiving an additional 6% commission from Property Manager 1.
75. It was further part of the scheme that Fawell caused the “master list” to identify
defendant WARNER as the “sponsor” for the 17 N. State Lease.
76. It was further part of the scheme that, between approximately October 1991 and at
least October 2001, defendant WARNER received approximately $383,276 in commission payments
related to the 17 N. State Lease and its renewal.
The Bellwood Lease
77. It was further part of the scheme that, in approximately 1992, due to defendant
RYAN providing defendant WARNER with participatory status in, and material non-public
information relating to, governmental decisions, WARNER learned that the SOS Office was seeking
office space for certain operations of the SOS Office’s Department of Police.
78. It was further part of the scheme that, in or about early 1992, defendant WARNER
contacted SOS Official E and advised SOS Official E that the SOS Office had identified a building
at 405 N. Mannheim Road in Bellwood, Illinois, for potential use by the SOS Office’s Department
of Police. WARNER further indicated that defendant RYAN would be contacting SOS Official E
with the information.
79. It was further part of the scheme that, shortly thereafter, a secretary to defendant
RYAN contacted SOS Official E and directed SOS Official E to consider the 405 N. Mannheim
Road location for use by the SOS Office’s Department of Police.
39
80. It was further part of the scheme that, on or about October 15, 1992, for the purpose
of leasing the property to the SOS Office and profiting therefrom, defendant WARNER obtained
an ownership interest in the building at 405 N. Mannheim Road in Bellwood, Illinois, while
concealing this interest through the use of a third party nominee.
81. It was further part of the scheme that defendant RYAN authorized the SOS Office
to enter, on or about December 15, 1992, a five-year lease for use and occupancy of the building at
405 N. Mannheim Road in Bellwood (hereinafter “the Bellwood Lease”). In or about March 1998,
RYAN authorized the renewal of the Bellwood Lease for another five-year term.
82. It was further part of the scheme that, between approximately December 1992 and
March 2003, defendant WARNER received approximately $171,000 in proceeds related to the
Bellwood Lease, a portion of which he applied toward a $95,000 loan related to Comguard.
The Joliet Lease
83. It was further part of the scheme that, in approximately early 1994, due to defendant
RYAN providing defendant WARNER with participatory status in, and material non-public
information relating to, governmental decisions, WARNER learned that the SOS Office was
seeking office space in the Joliet area.
84. It was further part of the scheme that, in approximately early 1994, defendant
RYAN instructed a high-ranking SOS Office official (hereinafter referred to “SOS Official G”) to
contact defendant WARNER to help locate a building for the purpose of a new SOS Office lease.
85. It was further part of the scheme that SOS Official G did as defendant RYAN
directed, and defendant WARNER arranged for and caused SOS Official G to inspect a building at
605 Maple Road in Joliet, Illinois.
40
86. It was further part of the scheme that, on or about October 31, 1994, for the purpose
of leasing the property to the SOS Office and profiting therefrom, defendant WARNER obtained
a substantial ownership interest in the building at 605 Maple Road in Joliet, Illinois, while
concealing his ownership interest in the building through the use of a third party nominee.
87. It was further part of the scheme that defendant RYAN authorized the SOS Office
to enter, on or about January 1, 1995, a four-year lease for use and occupancy of the building at 605
Maple Road in Joliet (hereinafter “the Joliet Lease”).
88. It was further part of the scheme that, beginning in approximately January 1995 and
continuing to March 1999, defendant WARNER received approximately $387,500 in proceeds
related to the Joliet Lease.
Awarding An SOS Office Lease to Associate 2
89. It was further part of the scheme that, beginning in or about 1993 and continuing to
at least 2002, Associate 2 provided personal and financial benefits to defendant RYAN, including
annual vacation-related benefits. In particular, RYAN received free lodging each year at the
Jamaican vacation home of Associate 2 and, on at least two occasions, received free lodging at
Associate 2's Palm Springs, California, home. Annually, Associate 2 provided RYAN between
$1,000-2,000 in lodging benefits.
90. It was further part of the scheme that, beginning in or about 1994 and continuing to in
or about 1998, Fawell also received free lodging at the Jamaican vacation home of Associate 2, and
on at least two occasions, received free lodging at Associate 2's Palm Springs, California home.
For each year from 1994-1998, Fawell received between $1,000-2,000 in lodging benefits from
Associate 2.
41
91. It was further part of the scheme that, in or about early 1997, defendant RYAN, with
Fawell’s assistance, took official action to benefit Associate 2. In particular, RYAN initiated
contact with Associate 2 and proposed that the SOS Office lease a commercial building located in
South Holland, Illinois, then principally vacant, which was owned by an entity controlled by
Associate 2.
92. It was further part of the scheme that defendant RYAN instructed SOS Official
D to contact Associate 2 and arrange an SOS Office lease of Associate 2's South Holland building
(the “South Holland Lease”). In negotiating the South Holland Lease with Associate 2, SOS Official
D reported directly to defendant RYAN and obtained direction from RYAN.
93. It was further part of the scheme that defendant RYAN and Fawell, working through
SOS Official D and other SOS Office officials, approved the South Holland Lease. Defendant
RYAN signed the lease documents, including approving terms and conditions that were not part of
the standard SOS Office lease and which terms benefitted Associate 2.
94. It was further part of the scheme that, between approximately May 1997 and June
2002, pursuant to the lease defendant RYAN approved and signed, Associate 2 received
approximately $600,000 in lease payments from the SOS Office, via the United States mails.
95. It was further part of the scheme to defraud that, from in or about 1993 to at least
January 2002, in order to conceal the free lodging benefits defendant RYAN was receiving from
Associate 2 and at RYAN’s urging, RYAN and Associate 2 repeatedly engaged in sham
transactions, in which RYAN tendered a check to Associate 2 in the amount of the lodging benefit
and Associate 2 provided back to RYAN amounts of cash equal to the amounts indicated on the
checks tendered by and through RYAN.
42
96. It was further part of the scheme that, after August 26, 1997, and continuing through
approximately January 2002, defendant RYAN and Fawell continued to receive lodging benefits
from Associate 2 in violation of RYAN’s stated gift policy and in violation of the SOS Office policy
directive described above in paragraph 2(J) of Count One.
97. It was further part of the scheme that defendant RYAN concealed the vacation
benefits he had received from Associate 2 by, among other things, a) knowingly failing to disclose
gifts and financial benefits he had received from Associate 2 as required by law and b) making false
and misleading statements of material fact when interviewed in January 2000 about financial
arrangements involving his vacations with Associate 2 by federal investigators conducting the Grand
Jury Investigation.
Authorizing Official Acts Relating To Associate 1
98. It was further part of the scheme that, beginning no later than the mid-1990s and
continuing to at least 2002, Associate 1 provided personal and financial benefits to and for the
benefit of defendant RYAN. Such benefits included, without limitation, the following:
A. Monetary payments and gifts on multiple occasions to defendant RYAN which payments and gifts exceeded the $50 threshold;
B. Vacation benefits to defendant RYAN, including benefits associated with a 1995 trip to Cancun, Mexico; and
C. Gifts and personal service benefits to RYAN’s family members, including a $2,200 vacation benefit to a RYAN daughter’s family in 1999.
99. It was further part of the scheme that defendant RYAN concealed the personal and
financial benefits he received from Associate 1, and Associate 1 concealed the personal and financial
benefits he provided to RYAN.
100. It was further part of the scheme that defendant RYAN took official action to benefit
43
Associate 1 relating to the following contracts and business opportunities:
Awarding SOS Office Leases To Clients Of Associate 1
101. It was further part of the scheme that, in 1995 and again in 1997, defendant RYAN
authorized the SOS Office to enter into leases of Springfield, Illinois property, and Associate 1
received commissions for assisting in placing these leases with the SOS Office. Said commission
payments to Associate 1 totalled over $38,000.
Awarding Grayville Prison To Associate 1 Client
102. At times material to this indictment:
A. In or about late 2000, the Governor’s Office, in conjunction with the Illinois
Department of Corrections (hereinafter “IDOC”), commenced a site selection process for the
purpose of identifying a specific geographic location for the construction of a maximum security
prison to house prisoners in the custody of the IDOC.
B. In or about January 2001, the IDOC, with the knowledge and concurrence of
the Governor’s Office, publicly announced three particular locations that had been selected as
finalists for the site of the maximum security prison.
C. On or about February 23, 2001, at an internal meeting of high ranking
officials of the Governor’s Office and the IDOC, defendant RYAN chose the town of Grayville,
located in southeastern Illinois, to be the site for the maximum security prison from among the three
finalists. Defendant RYAN’s February 23, 2001 internal decision was not then made public.
D. Prior to February 23, 2001, one or more high-ranking officials in the
Governor’s Office had complained to defendant RYAN’s gubernatorial chief of staff that it was
44
improper for Associate 1 to routinely participate and be present for the conducting of official
government business in and around defendant RYAN’s governmental office.
103. It was further part of the scheme that, on or about February 23, 2001, due to
defendant RYAN providing Associate 1 with participatory status in, and material non-public
information relating to, governmental decisions, RYAN informed Associate 1 that RYAN had
selected Grayville to be the recipient of the maximum security prison site. At the time RYAN
provided Associate 1 the information regarding Grayville, an aide to RYAN reminded Associate 1
that Grayville’s selection was not public information.
104. It was further part of the scheme that, shortly after defendant RYAN informed
Associate 1 of the Grayville selection, Associate 1 met with a representative of a business group
affiliated with Grayville (hereinafter the “Grayville Representative”) and entered into an agreement
to lobby for the selection of Grayville as the site for the proposed maximum security prison, in
return for $50,000 in upfront lobbying fees.
105. It was further part of the scheme that, on or about March 12, 2001, Associate 1
received a $50,000 cashier’s check from the Grayville Representative as his lobbying fee.
Associate 1 then deposited this check into a checking account that he controlled. During the two-
month period thereafter, Associate 1 structured cash withdrawals from his bank account totaling
approximately $35,000, such that no single withdrawal exceeded $10,000, the threshold level which
would have triggered the financial institution’s obligation to notify the Internal Revenue Service of
the withdrawals.
106. It was further part of the scheme that, after entering into the agreement, Associate 1
falsely told one or more individuals affiliated with the Grayville Representative that he was actively
45
1
lobbying for Grayville’s selection pursuant to their agreement and did not disclose that defendant
RYAN had already made known to Associate 1 that the prison selection had been made.
107. It was further part of the scheme that, on or about April 12, 2001, defendant RYAN
announced his selection of Grayville as the chosen prison site in a public ceremony in Grayville, at
which announcement RYAN publicly acknowledged, at Associate 1’s recommendation, the efforts
of the Grayville Representative in promoting Grayville’s selection.
Referring Wisconsin Energy To Associate 1
108. At times material to the indictment:
In or about mid-1999, Wisconsin Energy was seeking to hire a lobbyist in the State of
Illinois to handle various regulatory and governmental issues in connection with a proposed project
Wisconsin Energy was undertaking in Illinois. Udstuen was contacted by an intermediary, acting
on behalf of Wisconsin Energy, to solicit Udstuen’s recommendation for an Illinois lobbyist.
109. It was further part of the scheme that Udstuen thereafter conferred with defendant
RYAN, and RYAN and Udstuen agreed that Udstuen should recommend Associate 1 as the lobbyist
for Wisconsin Energy.
110. It was further part of the scheme that, in or about late 1999, Udstuen told Associate
that Associate 1 was being recommended as a lobbyist for Wisconsin Energy and that his
recommendation was being made with the concurrence of defendant RYAN.
111. It was further part of the scheme that, after Wisconsin Energy hired Associate 1 as its
lobbyist, Associate 1 gave Udstuen a $4,000 cash payment in the men’s bathroom of a Chicago
restaurant for making the referral of Associate 1.
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112. It was further part of the scheme that, after providing Udstuen with $4,000, Associate
1 told Udstuen that he was also “taking care” of defendant RYAN relating to the referral of
Wisconsin Energy.
Hiring Associate 1 As A Lobbyist For MPEA
113. At times material to the indictment:
A. The Metropolitan Pier and Exposition Authority (“MPEA”) was an entity
which received annual public funding and which made other requests through Illinois’ General
Assembly. Officers and directors of the MPEA were jointly appointed by the Governor and the
Mayor of the City of Chicago.
B. During and throughout the 1990's, MPEA had engaged a law firm
(hereinafter, “Firm A”) as its principal outside lobbyist to represent its interests before Illinois’
General Assembly.
114. It was further part of the scheme that, in 1999, defendant RYAN directed that
Associate 1 be hired as an additional lobbyist for MPEA, even though neither MPEA nor Firm A
was seeking any additional lobbying assistance at that time. Beginning on or about January 1, 2000,
at the direction of Fawell and defendant RYAN, Firm A hired Associate 1 as a “sub-lobbyist” with
an annual retainer of $60,000 per year. This retainer was paid by MPEA to Firm A for disbursal to
Associate 1 and continued for three years through December 31, 2002.
115. It was further part of the scheme that, in calendar year 2000, the initial year of the
lobbying relationship, Firm A had little or no work to give to Associate 1, and thus Associate 1’s
firm provided little or no lobbying services to MPEA. Thereafter, understanding that Associate 1’s
firm would remain as a sub-lobbyist, Firm A provided Associate 1’s firm some basic assignments,
47
which assignments previously had been performed by Firm A.
Authorizing the Award of Low Digit Plates To Those Providing Benefits To RYAN
116. At times material to this indictment:
The SOS Office was responsible for issuing license plates to qualifying
individuals. In addition to the general distribution of plates, the SOS Office issued low-digit or
specialty license plates, which were not generally available to any member of the public
(collectively, the “low-digit plates”). During the period from January 1991 to January 1999,
defendant RYAN
personally approved the award of the most coveted low-digit plates.
Awarding Low Digit Plates To Those Providing Campaign And Personal Benefits
117. In or about October 1990, shortly before defendant RYAN’s November 1990 election
as Secretary of State, defendant RYAN solicited, on behalf of Citizens For Ryan, a $75,000 loan
from an individual known to RYAN (hereinafter “Individual 3”). Individual 3 then arranged for a
$75,000 loan to Citizens For Ryan through a friend of Individual 3. Within two weeks of receipt
of the loan, Citizens For Ryan repaid the loan in full, and no interest was charged for the loan. In
or about November 1990, in a handwritten note, defendant RYAN personally acknowledged
Individual 3's efforts.
118. It was further part of the scheme that, in or about early 1991, shortly after
defendant RYAN took office, RYAN initiated contact with Individual 3 and Individual 3's friend
and awarded each with low-digit plates as rewards for their arranging the $75,000 loan to Citizens
48
For Ryan.
119. It was further part of the scheme that, thereafter, defendant RYAN awarded coveted
low-digit plates to individuals as a reward for financial support provided to defendant RYAN and
Citizens For Ryan.
Low Digit Plates Provided To Individual 1
120. By no later than 1995, defendant RYAN met Individual 1, who desired to obtain
low digit plates for himself and family members. Individual 1 had acquired a number of low-digit
plates from prior SOS Office administrations.
121. It was further part of the scheme that, beginning in March 1996 and continuing
through December 1998, defendant RYAN awarded Individual 1 a number of low-digit plates while
receiving, annually, at least $500 or more in personal checks from Individual 1.
122. It was further part of the scheme that, on or about September 5, 1997, defendant
RYAN and Individual 1 had an in-person conversation in Chicago at a social event. In the
conversation, Individual 1 expressed an interest in contributing to RYAN’s gubernatorial campaign
in the amount of $2,000. Individual 1 further indicated that he did not wish his contribution to be
disclosed on campaign disclosure reports. In order to conceal the contribution to RYAN, RYAN
directed that Individual 1 make out four $500 checks to RYAN and specified RYAN family
members, which Individual 1 then did.
123. It was further part of the scheme that defendant RYAN accepted gifts from
Individual
1 in December 1997 and December 1998 in violation of RYAN’s stated gift policy and in violation
of the SOS Office policy directive described above in paragraph 2(J) of Count One.
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124. It was further part of the scheme and to conceal the scheme that defendant RYAN
failed to disclose the financial benefits he received from Individual 1 in 1997 and 1998 until after
federal investigators participating in the Grand Jury Investigation first questioned RYAN on October
16, 2000 about his relationship with Individual 1.
Warner Low Digit Plates
125. It was further part of the scheme that, in or about early 1991, defendant WARNER
advised defendant RYAN that RYAN needed to keep close track of how low digit plates were issued
and that RYAN should use the plates as a “plum.”
126. It was further part of the scheme that, beginning in the early 1990s and continuing
through late 1998, defendant RYAN approved low-digit plate requests made by defendant
WARNER. WARNER made the requests for, among others, a) numerous business associates and
clients of his private insurance business and b) employees of his private business, both of which
inured to his personal and financial benefit.
127. It was further part of the scheme that, in order to raise campaign funds to benefit
Citizens For Ryan, defendant WARNER solicited, among others, some of the individuals who had
received low-digit plates approved by defendant RYAN at the request of WARNER.
128. It was further part of the scheme that, to facilitate defendant WARNER’s request for
low-digit plates, one of defendant RYAN’s government secretaries maintained a cash “kitty,”
consisting of cash that WARNER had given to her and which the secretary used to pay fees
associated with many of WARNER’s numerous low-digit plate requests. WARNER, who was the
only individual for whom such arrangement was made, replenished the cash kitty periodically.
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129. It was further part of the scheme that defendant RYAN otherwise gave defendant
WARNER preferential treatment in the low-digit license plate award process and awarded over 90
low-digit license plates to WARNER and third parties acting through WARNER.
Terminating IG Investigators and the Reorganizing IG Department
130. At times material to the indictment:
A. Beginning no later than 1991 and continuing through at least 1998, Citizens For
Ryan, working principally through SOS Office departmental contacts, sponsored annual political
fundraising events that relied upon SOS Office personnel selling political fundraising tickets. On
an annual basis, the two principal employee-based fundraising events raised approximately $500,000
per year for Citizens For Ryan.
B. On behalf of Citizens For Ryan and related to the annual employee-based
fundraisers, SOS Office chief of staff Scott Fawell mandated political fundraising “goals” for SOS
Office departments. Cognizant of Fawell’s directives regarding fundraising activities, certain SOS
Office employees, including supervisory employees in the Driver Services Department and Vehicle
Services Department, individually sold thousands of dollars in fundraising tickets on behalf of
Citizens For Ryan through various means.
C. On approximately an annual basis until the late 1990s, in conjunction with
the employee fundraising events, defendant RYAN participated in ceremonies with SOS Office
employees to acknowledge individual SOS Office employees, who had sold substantial numbers of
political fundraising tickets. Such participation included RYAN taking photographs with some of
51
the top fundraising ticket sellers from the SOS Office.
D. By December 1994, shortly after the 1994 reelection campaign, Fawell and
defendant RYAN were aware that agents of the IG Department had been or were investigating
alleged official misconduct by employees of the Drivers Services Department and the Vehicle
Services Department motivated by, or involving, the sale and distribution of Citizens For Ryan
fundraising tickets, including the following:
i. In March 1993, the IG Department had investigated alleged official
misconduct by SOS Office employees of the Libertyville driver’s license facility. During the course
of the investigation, IG Investigators obtained evidence that the alleged official misconduct may
have been linked to sales of Citizens For Ryan fundraiser tickets by one or more SOS Office
employees. During the investigation, IG Investigators seized a briefcase containing cash and
fundraising tickets from the governmental office of an SOS Office employee who was a suspect in
the criminal investigation. On or about March 9, 1993, the Inspector General, who reported to
defendant RYAN, told RYAN that IG Investigators had located fundraising-related evidence in the
SOS Office employee’s governmental office.
ii. In late March1994, the IG Department had investigated allegations,
aired on local television, that an SOS Office employee had solicited an auto parts dealer, regulated
by the SOS Office, for fundraising tickets during state working hours. The fundraising-related
allegations, which were aired on local television, were communicated to defendant RYAN.
iii. In April 1994, the IG Department had investigated official
misconduct by an employee of the SOS Office’s Naperville licensing facility. During the course
of the investigation, IG Investigators believed that the alleged official misconduct may have been
52
motivated by sales of Citizens For Ryan fundraising tickets by an SOS Office employee. On or
about April 26, 1994, at the direction of the Inspector General, an IG Investigator called defendant
RYAN and communicated the alleged fundraising-related motive directly to defendant RYAN.
iv. In November 1994, IG Investigators learned that a driver involved in
a widely-publicized fatal traffic incident may have obtained his commercial driver’s license illegally
at the McCook driver’s license facility. After the allegations were learned of by an IG Investigator
and a preliminary inquiry was made, the allegations were reported to the Inspector General who, in
turn, notified other high-ranking SOS Office officials of the allegations.
131. It was further part of the scheme that, in December 1994, in an internal memorandum
not intended for public disclosure, Fawell recommended to defendant RYAN that certain IG
Investigators be terminated and reassigned, in order to discourage investigations into improper
political fundraising activities and related official misconduct benefitting defendant RYAN and
Citizens For Ryan.
132. It was further part of the scheme that, in one or more face-to-face meetings between
Fawell and defendant RYAN following the distribution of the December 1994 memo, defendant
RYAN agreed to Fawell’s recommendation in the December 1994 memo as to the IG Department
and thereafter authorized the termination or reassignment of the majority of IG Investigators.
133. It was further part of the scheme that, in or about January 1995, Fawell directed a
memorandum to defendant RYAN summarizing the results of their meetings, including the decision
to reassign IG Investigators who were “trouble.”
134. It was further part of the scheme that Fawell drafted and distributed written
memoranda falsely justifying the decision to terminate IG Investigators and reorganize the IG
53
Department as being based on budgetary cutbacks at the SOS Office.
135. It was further part of the scheme that, from February 1995 through June 1995, most
of the IG Investigators, including those who had made inquiries into allegations of official
misconduct linked to fundraising ticket sales, were terminated or reassigned. As a direct
consequence of these actions, defendant RYAN and Fawell disabled the IG Department and
substantially hindered it from fulfilling its duties to, among other things, investigate all allegations
of SOS Office misconduct, including allegations linked to fundraising efforts of Citizens For Ryan.
Diverting and Authorizing The Diverting Of State Resources To Benefit RYAN
136. It was further part of the scheme that, at times between 1992 and 1998, defendant
RYAN, Fawell and others authorized the diversion of SOS Office resources to benefit RYAN
personally and Citizens For Ryan, including in connection with certain political campaigns
defendant RYAN supported.
137. It was further part of the scheme that, with respect to a 1995-96 primary campaign
of then Texas Senator Phil Gramm, who was a candidate for president of the United States (the
“Gramm campaign”), defendant RYAN met with Fawell and Richard Juliano, another high-ranking
SOS Office official, to plan their participation in the Gramm campaign effort.
138. It was further part of the scheme that, in planning a primary campaign budget for the
Gramm campaign in Illinois, defendant RYAN proposed that certain individuals be given
“consulting” payments related to Gramm campaign.
139. It was further part of the scheme that defendant RYAN, with the assistance of
Fawell,
determined that RYAN, through certain of his family members, Fawell and Juliano would split the
54
“consulting” payments from the Gramm campaign.
140. It was further part of the scheme that defendant RYAN, with the assistance of Fawell
and Udstuen, recruited Alan Drazek to participate in the Gramm campaign through his company,
American Management Resources (“AMR”). In order to conceal the financial benefits that
defendant RYAN and Fawell were to receive, RYAN, Fawell and Juliano used AMR as a conduit
to funnel the “consulting” payments they were receiving. As further part of the effort to conceal,
at no time did RYAN, Fawell or Juliano disclose to the Gramm campaign that Fawell or RYAN
would be financial beneficiaries of the AMR payments.
141. It was further part of the scheme that, during the Gramm campaign, Fawell, Juliano
and other SOS Office employees working at their direction, and with the authorization and
knowledge of defendant RYAN, performed campaign work on state time and utilized state resources
to benefit the Gramm campaign. In particular, Fawell, Juliano and other SOS Office employees
personally participated in campaign activities, including campaign meetings, phone conferences,
political fundraisers, organizational meetings, strategy sessions, as well as public appearances with
Gramm. Many of the campaign activities occurred during the business day and utilized SOS Office
resources.
142. It was further part of the scheme that, from in or about September 1995 to in or
about March 1996, defendant RYAN, Fawell and Juliano caused over $32,000 in payments to be
made from the Gramm campaign through AMR to individuals and entities RYAN, Fawell and
Juliano designated. RYAN directed his share of the “consulting” payments to certain family
members, who did not perform bona fide services for the Gramm campaign.
143. It was further part of the scheme that defendant RYAN concealed the benefits he
55
received from the Gramm campaign by a) omitting the income on his 1995 and 1996 Statement of
Economic Interest forms; and b) omitting the Gramm campaign related income from his original and
amended 1995 and 1996 federal and state tax returns prior to the public disclosure of his payments
during the course of the Grand Jury Investigation.
144. It was further part of the effort to conceal the nature of defendant RYAN’s
participation in the scheme that, in 2002, in amending, for the second time, his 1995 and 1996
federal and state tax returns to disclose the Gramm payments, RYAN made false and misleading
statements by indicating that it was the Gramm campaign’s idea for RYAN to receive funds related
to the Gramm campaign.
Concealing Misconduct And Obstructing the Grand Jury Investigation
Shredding Incident
145. It was further part of the scheme that, in or about September 1998, after learning
of the existence of the Grand Jury Investigation (as set forth in paragraph 4 above), Scott Fawell,
in the presence of defendant RYAN and in anticipation of law enforcement action, directed SOS
Office employees, including William Mack, to “clean up” Citizens For Ryan related documents on
SOS Office premises.
146. It was further part of the scheme that, after Fawell gave Mack the directive in the
presence of defendant RYAN, Mack gathered together a number of SOS Office employees and
directed them to shred voluminous amounts of material present in the SOS executive offices. Such
shredding occurred late into the evening and filled numerous garbage bags, which bags were
transported out of the executive office area that evening. Such shredded and destroyed documents
were relevant and material to the Grand Jury Investigation and included campaign-related financial
56
reports, low-digit license plate requests, candidate schedules, campaign press releases, computer
files, volunteer information and other campaign related information that had been created and
maintained by SOS Office employees on SOS Office premises.
147. It was further part of the scheme that, shortly after the shredding was complete,
Mack
personally contacted defendant RYAN and Fawell to inform each that the SOS Office had been
“cleaned up.”
Interviews of RYAN In Relation To Grand Jury Investigation
148. It was further part of the scheme that defendant RYAN made material false
statements in three interviews with law enforcement agents who were conducting the Grand Jury
Investigation, including the following:
A. In the January 5, 2000, interview, defendant RYAN made false material
statements by stating, in substance, that:
i. On each occasion when RYAN was a guest of Associate 2 in
Jamaica, RYAN paid his own way and also paid all his own expenses, including lodging.
Regarding lodging in Jamaica, RYAN said that the cost was $1,000 per week, which RYAN
believed was the going rate for lodging at the property. RYAN further stated he paid the lodging
fee out of his own pocket. In addition, and related to the Jamaica inquiries by federal investigators,
RYAN caused checks purporting to be his payments for lodging to be provided to federal
investigators.
ii. RYAN was totally unaware of the pricing and contents of the South
Holland Lease and did not personally take part in the negotiation of the lease;
57
iii. RYAN had no recollection or knowledge of the original negotiations
of the Joliet lease;
iv. Regarding RYAN’s appointment of WARNER to the McPier board,
RYAN stated it was a resigning board member’s recommendation that RYAN appoint WARNER
and RYAN merely went along with the recommendation.
v. Inspector General Dean Bauer never informed him of the finding of
the briefcase and the campaign fundraising tickets at the Libertyville raid; and no one at the SOS
Office, including Dean Bauer, ever linked ticket sales to improper licensing.
B. In the October 16, 2000, interview, defendant RYAN made false material
statements by stating, in substance, the following:
i. RYAN never had any discussions with defendant WARNER regarding
WARNER’s interest in the Joliet lease or any SOS Office lease, and, further, RYAN had no personal
knowledge of WARNER profiting in any way regarding the Joliet lease;
ii. RYAN had no idea how WARNER could have had advance knowledge of the
SOS Office looking into a lease in the Joliet area and RYAN provided no advance information to
WARNER regarding future leases with the SOS Office; and.
iii. RYAN had no personal financial relationship with WARNER.
C. In the February 5, 2001, interview, defendant RYAN made false material
statements by stating, in substance, the following:
With respect to a conversation on a boat trip with Individual 1 that resulted in RYAN
receiving four $500 checks from Individual 1, RYAN stated that he did not give Individual 1 the
name of his son, nor did he write down the names or addresses of his son or his son’s wife and
58
provide them to Individual 1.
149. On or about August 3, 2000, at Chicago, in the Northern District of Illinois, Eastern
Division, and Springfield, Illinois,
GEORGE H. RYAN, SR. and LAWRENCE E. WARNER,
defendants herein, for the purpose of executing the aforesaid scheme, and attempting to do so, did
knowingly cause to be delivered by mail according to the direction thereon an envelope containing
a $43,760.89 check from the State of Illinois relating to the Validation Stickers contract, and
addressed to:
American Decal & Mfg. Co. 4100 West Fullerton Chicago, IL 60639
In violation of Title 18, United States Code, Sections 1341, 1346 and 2.
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COUNT THREE
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 2-148 of Count Two
of this indictment are hereby realleged and incorporated herein as if fully set forth herein.
2. On or about January 11, 1999, at Chicago, in the Northern District of
Illinois, Eastern Division, and Springfield, Illinois,
GEORGE H. RYAN, SR. and LAWRENCE E. WARNER,
defendants herein, for the purpose of executing the aforesaid scheme, and attempting to do so, did
knowingly cause to be delivered by mail according to the direction thereon an envelope containing
a State of Illinois check in the amount of $18,561.69 relating to the Joliet Lease, and addressed to:
Joliet Maple Limited Liability Park Place Investment 800 N. Clark Street Suite 219 Chicago, IL 60610
In violation of Title 18, United States Code, Sections 1341, 1346 and 2.
60
COUNT FOUR
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 2-148 of Count Two of
this indictment are hereby realleged and incorporated herein as if fully set forth herein.
2. On or about December 28, 1998, at Chicago, in the Northern District of Illinois, Eastern
Division, and elsewhere,
GEORGE H. RYAN, SR. and LAWRENCE E. WARNER,
defendants herein, for the purpose of executing the aforesaid scheme, and attempting to do so, did
knowingly cause to be delivered by mail according to the direction thereon an envelope containing
a check from IBM in the amount of $21,295.18 relating to the computer system contract and other
SOS Office computer-related contracts, and addressed to:
Omega Consulting 3101 N. Western Avenue Chicago, IL 60618
In violation of Title 18, United States Code, Sections 1341, 1346 and 2.
61
COUNT FIVE
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 2-148 of Count Two
of this indictment are hereby realleged and incorporated herein as if fully set forth herein.
2. On or about January 12, 1999, at Chicago, in the Northern District
of Illinois, Eastern Division, and Springfield, Illinois,
GEORGE H. RYAN, SR. and LAWRENCE E. WARNER,
defendants herein, for the purpose of executing the aforesaid scheme, and attempting to do so, did
knowingly cause to be delivered by mail according to the direction thereon an envelope containing
a check in the amount of $7,098.65 from Omega Consulting Group and relating to IBM, and
addressed to:
American Management Resources 7831 Churchill Morton Grove, IL 60053
In violation of Title 18, United States Code, Sections 1341, 1346 and 2.
62
COUNT SIX
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 2-148 of Count Two
of this indictment are hereby realleged and incorporated as if fully set forth herein.
2. On or about January 22, 1999, in the Northern District of Illinois, Eastern Division,
and Springfield, Illinois,
GEORGE H. RYAN, SR.,
defendant herein, for the purpose of executing the aforesaid scheme to defraud, and attempting to
do so, did knowingly cause to be delivered by mail according to the direction thereon an envelope
containing a State of Illinois check in the amount of $10,000 relating to the South Holland Lease
addressed to:
16475 Van Dam Road Building Partnership 16835 South Halsted Harvey, Illinois 60426-6113
In violation of Title 18, United States Code, Sections 1341, 1346 and 2.
63
COUNT SEVEN
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 2-148 of Count
Two of this indictment are hereby realleged and incorporated herein as if fully set forth herein.
2. On or about November 15, 2002, at Chicago, in the Northern District of Illinois,
Eastern Division, and elsewhere,
GEORGE H. RYAN, SR. and LAWRENCE E. WARNER,
defendants herein, for the purpose of executing the aforesaid scheme, and attempting to do so,
did knowingly cause to be delivered by mail according to the direction thereon an envelope
containing a check from Viisage in the amount of $18,902.79 relating to the digital licensing
contract, and addressed to:
National Consulting Company 3101 North Western Avenue Chicago, IL 60618
In violation of Title 18, United States Code, Sections 1341, 1346 and 2.
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COUNT EIGHT
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 2-148 of Count Two
of this indictment are hereby realleged and incorporated herein as if fully set forth herein.
2. On or about January 19, 1999, at Chicago, in the Northern District of Illinois,
Eastern Division, and Springfield, Illinois,
GEORGE H. RYAN, SR., and LAWRENCE E. WARNER,
defendants herein, for the purpose of executing the aforesaid scheme, and attempting to do so,
did knowingly cause to be delivered by mail according to the direction thereon an envelope
containing a State of Illinois check in the amount of $10,005 relating to the Bellwood Lease, and
addressed to:
Wells Mannheim Partnership 1839 North Lincoln Chicago, IL 60614
In violation of Title 18, United States Code, Sections 1341, 1346 and 2.
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COUNT NINE
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 2-148 of Count
Two of this indictment are hereby realleged and incorporated herein as if fully set forth herein.
2. On or about April 14, 1999, at Chicago, in the Northern District of Illinois,
Eastern Division,
GEORGE H. RYAN, SR. and LAWRENCE E. WARNER,
defendants herein, for the purpose of executing the aforesaid scheme, and attempting to do so,
did knowingly cause to be delivered by mail according to the direction thereon an envelope
containing a check in the amount of $18,590.82 relating to the 17 N. State Lease, and addressed
to:
National Consulting 3101 N. Western Avenue Chicago, IL 60618
In violation of Title 18, United States Code, Sections 1341, 1346 and 2.
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COUNT TEN
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 2-148 of Count
Two of this indictment are hereby realleged and incorporated as if fully set forth herein.
2. On or about March 12, 2001, in the Northern District of Illinois, Eastern
Division, and elsewhere,
GEORGE H. RYAN, SR.
defendant herein, and Associate 1, for the purpose of executing the aforesaid scheme to defraud, and
attempting to do so, knowingly did cause to be deposited with a private and commercial interstate
carrier for delivery according to the directions thereon, an envelope containing a cashier’s check in
the amount of $50,000, which represented a lobbyist fee relating to the Grayville representative;
addressed to Associate 1 in Springfield, Illinois.
In violation of Title 18, United States Code, Sections 1341, 1346 and 2.
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COUNT ELEVEN
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One of this indictment are hereby
realleged and incorporated herein as if fully set forth herein.
2. On or about January 5, 2000, in Chicago, in the Northern District of Illinois, Eastern
Division, and elsewhere,
GEORGE H. RYAN, SR.,
defendant herein, did knowingly and willfully make materially false, fictitious and fraudulent
statements and representations in a matter within the jurisdiction of the Federal Bureau of
Investigation, an agency within the executive branch of the Government of the United States,
when he stated the following:
i. On each occasion when RYAN was a guest of Associate 2 in Jamaica,
RYAN paid his own way and also paid all his own expenses, including lodging. Regarding
lodging in Jamaica, RYAN said that the cost was $1,000 per week, which RYAN believed was
the going rate for lodging at the property. RYAN further stated he paid the lodging fee out of his
own pocket.
ii. RYAN was totally unaware of the pricing and contents of the South
Holland Lease and did not personally take part in the negotiation of the lease;
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iii. RYAN had no recollection or knowledge of the original negotiations
of the Joliet lease;
iv. Regarding RYAN’s appointment of WARNER to the McPier board,
RYAN stated it was a resigning board member’s recommendation that RYAN appoint
WARNER and RYAN merely went along with the recommendation.
v. Inspector General Dean Bauer never informed him of the finding of
the briefcase and the campaign fundraising tickets at the Libertyville raid; and no one at the SOS
Office, including Dean Bauer, ever linked ticket sales to improper licensing.
All in violation of Title 18, United States Code, Section 1001(a)(2).
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COUNT TWELVE
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One of this indictment are hereby
realleged and incorporated herein as if fully set forth herein.
2. On or about October 16, 2000, in Chicago, in the Northern District of Illinois,
Eastern Division,
GEORGE H. RYAN, SR.,
defendant herein, did knowingly and willfully make materially false, fictitious and fraudulent
statements and representations in a matter within the jurisdiction of the Federal Bureau of
Investigation, an agency within the executive branch of the Government of the United States,
when he stated the following:
i. RYAN never had any discussions with defendant WARNER regarding
WARNER’s interest in the Joliet lease or any SOS Office lease, and, further, RYAN had no
personal knowledge of WARNER profiting in any way regarding the Joliet lease;
ii. RYAN had no idea how WARNER could have had advance knowledge of the
SOS Office looking into a lease in the Joliet area and RYAN provided no advance information to
WARNER regarding future leases with the SOS Office; and
iii. RYAN had no personal financial relationship with WARNER.
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All in violation of Title 18, United States Code, Section 1001(a)(2).
COUNT THIRTEEN
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One of this indictment are hereby
realleged and incorporated herein as if fully set forth herein.
2. On or about February 5, 2001, in Chicago, in the Northern District of Illinois,
Eastern Division,
GEORGE H. RYAN, SR.,
defendant herein, did knowingly and willfully make materially false, fictitious and fraudulent
statements and representations in a matter within the jurisdiction of the Federal Bureau of
Investigation, an agency within the executive branch of the Government of the United States,
when he stated the following:
With respect to a conversation on a boat trip with Individual 1 that resulted in
RYAN receiving four $500 checks from Individual 1, RYAN stated that he did not give
Individual 1 the name of his son, nor did he write down the names or addresses of his son or his
son’s wife and provide them to Individual 1.
All in violation of Title 18, United States Code, Section 1001(a)(2).
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COUNT FOURTEEN
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One of this indictment are hereby
realleged and incorporated as if fully set forth herein.
2. In about September 1998, in Chicago, in the Northern District of Illinois, Eastern
Division, and elsewhere,
LAWRENCE E. WARNER,
defendant herein, attempted to commit extortion, which extortion obstructed, delayed and
affected commerce, by knowingly attempting to obtain property in the form of payments from
American Decal Manufacturing under the color of official right and induced by the wrongful use
of actual and threatened fear of economic harm,
In violation of Title 18, United States Code, Sections 1951 and 2.
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COUNT FIFTEEN
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One of this indictment are hereby
realleged and incorporated as if fully set forth herein.
2. On or about May 18, 1998, in Chicago, in the Northern District of Illinois,
Eastern Division, and elsewhere,
LAWRENCE E. WARNER,
defendant herein, knowingly conducted and attempted to conduct a financial transaction
affecting interstate commerce, when defendant caused a National Consulting Company check to
be issued, made payable to American Management Resources, on North Community Bank
account number 1403880, in the amount of $1,666.67, which financial transaction involved the
proceeds of specified unlawful activity, namely, acts and activities constituting mail fraud, in
violation of Title 18, United States Code, Sections 1341 and 1346, and extortion, in violation of
Title 18, United States Code, Section 1951, related to the SOS Office validation stickers
contract, as further described in Count Two of this indictment, knowing that the transaction was
designed in whole and in part to conceal the nature, source, and ownership of the proceeds of
said specified unlawful activity, and while conducting and attempting to conduct said financial
transaction, knew that the property involved in the financial transaction represented the proceeds
of some form of unlawful activity,
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In violation of Title 18, United States Code, Sections 1956(a)(1)(B)(i) and 2.
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COUNT SIXTEEN
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One of this indictment are hereby
realleged and incorporated herein as if fully set forth herein.
2. On or about July 31, 1997, in the Northern District of Illinois, Eastern Division,
and elsewhere,
LAWRENCE E. WARNER,
defendant herein, knowingly conducted and attempted to conduct a financial transaction
affecting interstate commerce, when defendant caused an Omega Consulting Group Ltd. check
to be issued, made payable to American Management Resources, on North Community Bank
account number 1701044, in the amount of $43,453, which financial transaction involved the
proceeds of specified unlawful activity, namely, acts and activities constituting mail fraud, in
violation of Title 18, United States Code, Sections 1341 and 1346, and extortion, in violation of
Title 18, United States Code, Section 1951, related to the computer system contract and other
SOS Office computer-related contracts, knowing that the transaction was designed in whole and
in part to conceal the nature, source, and ownership of the proceeds of said specified unlawful
activity, and while conducting and attempting to conduct said financial transaction, knew that the
property involved in the financial transaction represented the proceeds of some form of unlawful
activity,
In violation of Title 18, United States Code, Sections 1956(a)(1)(B)(i) and 2.
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COUNT SEVENTEEN
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One of this indictment are hereby
realleged and incorporated as if fully set forth herein.
2. Beginning on or about July 31, 1997 and continuing through at least August 5,
1997, in Chicago, in the Northern District of Illinois, Eastern Division, and elsewhere,
LAWRENCE E. WARNER,
defendant herein, for the purpose of evading the reporting requirements of Title 31, United States
Code, Section 5313(a) and regulations prescribed thereunder, structured and assisted in
structuring and attempted to structure and assist in structuring, a transaction with the North
Community Bank, a domestic financial institution, namely, the withdrawal of $14,000 in United
States currency from his Omega Consulting Group Ltd. checking account into two separate
transactions at different branches of the North Community Bank and involving the cashing of
two checks, each in an amount under $10,000, as described below:
Check No. Date of Check Amount Date Check Cashed
1071 July 31, 1997 $9,000 August 4, 1997
1072 July 31, 1997 $5,000 August 5, 1997
3. Defendant WARNER committed this offense while violating other laws of the
United States, as set forth in Count One of this indictment, and as part of a pattern of illegal
activity involving more than $100,000 in a 12 month period commencing on May 5, 1997;
In violation of Title 31, United States Code, Section 5324(a)(3) and (d)(2).
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COUNT EIGHTEEN
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1–4 of Count One of this indictment are hereby
realleged and incorporated herein as if fully set forth herein.
2. At times material to this indictment:
A. RYAN Relative One was the husband of a RYAN Daughter.
B. Individual 2 was a caretaker for defendant RYAN’s mother-in-law.
Income and Expenditure Reports (D-2s)
C. CFR was required under Illinois law to file income and expenditure
reports (D-2s), typically on a semi-annual basis, with the Illinois State Board of Elections. The
D-2s reported the amount and purpose of each expenditure of $150 or more incurred by CFR. At
the time of filing, each D-2 was verified for truth and completeness by the treasurer of CFR.
D. Campaign Reporting Services (“CRS”) was a Springfield-based firm that
was hired by CFR to prepare its D-2 campaign disclosure forms beginning no later than 1991
and continuing through 1998. CFR paid a monthly fee to CRS for the preparation of the D-2's
and related services provided to CFR. Said monthly fee was increased from $2,000 per month to
$3,000 per month in approximately early 1994.
E. Agents and employees of CFR provided CRS with the information
necessary to prepare the D-2s. As a general practice, agents and employees of CFR prepared for
each check a voucher describing the amount and purpose of the check. The information on the
vouchers was used by CRS to prepare the D-2s. On occasion, when a CFR check was written or
issued by defendant RYAN or other authorized agents of CFR without a corresponding voucher,
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the purpose of the expenditure was listed on the check or was otherwise made known to CRS in
order to prepare the D-2s.
Applicable Law and Duties
F. Defendant RYAN had a legal duty and obligation, under the Internal
Revenue Code and regulations and rules issued thereunder, to report accurately all income that
he had received during a particular year on the annual joint income tax return that he filed.
G. Defendant RYAN was permitted under Illinois law to use CFR funds for
personal expenditures, but was required under the Internal Revenue Code and regulations and
rules issued thereunder, to report as income on his joint income tax return CFR expenditures
made for any personal purposes.
H. Defendant RYAN was not permitted, under the Internal Revenue Code
and
regulations and rules issued thereunder, to shift tax liability for his income to nominees or third
parties by having the income payments made in the name of nominees or third parties.
I. Defendant RYAN was required, under the Internal Revenue Code and
regulations and rules issued thereunder, to report as income on his joint tax returns any income,
including payments, cash, bribes or gratuities that he received by virtue of his official position.
The Corrupt Endeavor
3. Beginning in approximately January of 1991 and continuing through
approximately December of 2002, at Chicago and elsewhere in the Northern District of Illinois,
Eastern Division, and elsewhere,
GEORGE H. RYAN, SR.,
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defendant herein, corruptly obstructed and impeded and endeavored to obstruct and impede the
Internal Revenue Service in the due administration of Title 26, United States Code, namely the
correct reporting of income and identification, assessment, and collection of taxes and tax penalties
due the United States.
Citizens For Ryan Funds
4. It was part of the corrupt endeavor that on numerous occasions, defendant RYAN
used CFR funds to pay his and certain family members’ personal expenses and to provide
personal gifts (including payments for travel related expenses) for the benefit of third parties,
and misled and knowingly failed to inform the CFR agents and employees, CRS, and other
outside firms preparing the D-2s for CFR of the numerous personal expenses he had incurred and
personal gifts that he had purchased with CFR funds.
5. It was further part of the corrupt endeavor that defendant RYAN, acting in
concert
with other agents and employees of CFR, and others, caused income that he was receiving from
both CFR and third parties to be diverted, paid and allocated to others, including family
members, thereby depriving the IRS of accurate information as to his true income as well as the
true income of the individuals to whom he diverted, paid and allocated his income.
6. It was further part of the corrupt endeavor that in order to conceal personal
expenditures of CFR funds, defendant RYAN wrote, and caused agents and employees of CFR
to write, false and misleading notations on CFR checks issued to family members indicating that
expenditures were for “consulting” or “campaign work” when, in truth and fact, the expenditures
were gifts to family members.
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7. It was further part of the corrupt endeavor that during the period from July 1996
through August 1997, defendant RYAN caused CFR checks totaling $55,000 to be issued to
RYAN Relative One, purportedly for campaign-related services, knowing that RYAN Relative
One performed no services for said money and that the payments were gifts directed by RYAN.
8. It was further part of the corrupt endeavor that by misleading and knowingly
failing to inform the CFR agents and employees, CRS, and other outside firms preparing the D-
2s for CFR of the numerous personal expenses he had paid and personal gifts that he had given
with CFR funds, defendant RYAN caused D-2s to be filed on behalf of CFR which falsely
described numerous personal expenses and gifts as being campaign or political expenses.
9. It was further part of the corrupt endeavor that during the period from on or about
August 7, 1998 through on or about November 6, 1998, defendant RYAN issued and caused to
be issued four CFR checks totaling $6,000 payable to Individual 2.
10. It was further part of the corrupt endeavor that to avoid public disclosure on the
D-2s of the gifts that he was giving to family members with CFR money, defendant RYAN only
gave CFR money directly to family members who did not have the same surname (Ryan) and
used third parties to funnel CFR funds to one or more family members who shared his surname.
11. It was further part of the corrupt endeavor that defendant RYAN and agents and
employees of CFR used CRS to funnel CFR funds to one or more RYAN family members whose
surname was Ryan. In or after 1994, when CRS increased its monthly fee to CFR by $1,000 per
month, CRS, at CFR’s direction, began making a monthly payment of $1,000 to one or more
RYAN family members who provided little or no service to either CRS or CFR.
12. It was further part of the corrupt endeavor that on numerous occasions, agents or
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employees of CFR issued IRS Form 1099s to the family members and associates of defendant
RYAN who had received monetary gifts of CFR funds, which Form 1099s listed the CFR
payments made to them as “non-employee compensation,” thereby concealing and
misrepresenting the true nature of said payments.
13. It was further part of the corrupt endeavor that each year, defendant RYAN
provided and caused to be provided to his accountant a list of the personal expenses that had
been paid with CFR funds, knowing that said list was prepared in reliance on the D-2's and
knowing further that as a result of his concealment and deceit, said list substantially understated
the actual amount of personal expenses that he had paid, and gifts that he had given, using CFR
funds.
Gramm Campaign Payments
14. It was further part of the corrupt endeavor that, with respect to a 1995-96 primary
campaign of then Texas Senator Phil Gramm, who was a candidate for president of the United
States (the “Gramm campaign”), defendant RYAN met with Fawell and Richard Juliano, another
high-ranking SOS Office official, to plan their participation in the Gramm campaign effort.
15. It was further part of the corrupt endeavor that, in planning a primary campaign
budget for the Gramm campaign in Illinois, defendant RYAN proposed that certain individuals
be given “consulting” payments related to Gramm campaign.
16. It was further part of the corrupt endeavor that defendant RYAN, with the
assistance of Fawell, determined that RYAN, through certain of his family members, Fawell and
Juliano would split the “consulting” payments from the Gramm campaign.
17. It was further part of the corrupt endeavor that defendant RYAN, with the
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assistance of Fawell and Udstuen, recruited Alan Drazek to participate in the Gramm campaign
through his company, American Management Resources. In order to conceal the financial
benefits that defendant RYAN and Fawell were to receive, RYAN, Fawell and Juliano used
AMR as a conduit to funnel the “consulting” payments they were receiving. As further part of
the effort to conceal, at no time did RYAN, Fawell or Juliano disclose to the Gramm campaign
that Fawell or RYAN would be financial beneficiaries of the AMR payments.
18. It was further part of the corrupt endeavor that, from in or about September 1995
to in or about March 1996, defendant RYAN, Fawell and Juliano caused over $32,000 in
payments to be made from the Gramm campaign through AMR to individuals and entities
RYAN, Fawell and Juliano designated. RYAN directed his share of the “consulting” payments
to certain family members, who did not perform bona fide services for the Gramm campaign.
19. It was further part of the corrupt endeavor that defendant RYAN concealed the
benefits he received from the Gramm campaign by a) omitting the income on his 1995 and 1996
Statement of Economic Interest forms; and b) omitting the Gramm campaign related income
from his original and amended 1995 and 1996 federal and state tax returns prior to the public
disclosure of the Gramm campaign payments during the course of the Grand Jury Investigation.
20. It was further part of the corrupt endeavor that, in 2002, in amending, for the
second time, his 1995 and 1996 federal and state tax returns to disclose the Gramm payments,
RYAN made false and misleading statements by indicating that it was the Gramm campaign’s
idea for RYAN to receive funds related to the Gramm campaign.
Use of Cash
21. It was further part of the corrupt endeavor that defendant RYAN obtained and
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failed to report cash and other financial benefits as income on his federal and state tax returns.
22. It was further part of the corrupt endeavor that defendant RYAN spent cash that
he received from third parties for his personal use, thereby minimizing any documentation of his
personal expenses. Such personal expenditures of cash included cash expenditures on frequent
gambling trips to various casinos, cash expenditures relating to out-of-state trips and cash
expenditures for gifts to and for the benefit of RYAN family members and others.
Receipt of Money from Political Supporters
23. It was further part of the corrupt endeavor that on more than one occasion,
defendant RYAN received money from political supporters which he deposited into his personal
account and used for personal expenses without advising any agents or representatives of CFR,
and thereby knowingly caused said payments to be omitted from the D-2s filed by CFR.
Defendant RYAN failed to advise his accountants that he had received such payments and failed
to report said payments as income on his federal tax returns.
24. It was further part of the corrupt endeavor that in order to conceal payments in the
amount of $2,000 made to him by Individual 1 in approximately September of 1997, defendant
RYAN directed Individual 1 to make out four $500 checks to defendant RYAN and specified
RYAN family members, which Individual 1 then did. Defendant RYAN failed to report said
payments as income on his tax returns and, until the issue was raised in an interview with federal
law enforcement officials, failed to report said payments on his Statement of Economic Interest
for the year 1997.
Filing of False Tax Returns
25. It was further part of the corrupt endeavor that on or about April 15, 1996,
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defendant RYAN filed a materially false individual income tax return, IRS form 1040, for the tax
year 1995, in which he knowingly understated his actual gross income.
26. It was further part of the corrupt endeavor that on or about April 15, 1997,
defendant RYAN filed a materially false individual income tax return, IRS form 1040, for the tax
year 1996, in which he knowingly understated his actual gross income.
27. It was further part of the corrupt endeavor that on or about April 15, 1998,
defendant RYAN filed a materially false individual income tax return, IRS form 1040, for the tax
year 1997, in which he knowingly understated his actual gross income.
28. It was further part of the corrupt endeavor that on or about April 15, 1999,
defendant RYAN filed a materially false individual income tax return, IRS form 1040, for the tax
year 1998, in which he knowingly understated his actual gross income.
29. It was further part of the corrupt endeavor that on or about February 19, 1998,
after defendant RYAN was an announced candidate for Governor, RYAN filed amended tax
returns, IRS Forms 1040X, for the years 1995 and 1996, in which he increased the amount of his
reported income for 1995 and 1996 based on additional personal expenditures of CFR funds, but
still omitted substantial income that he had received and diverted to family members or others.
30. It was further part of the corrupt endeavor that on or about December 21, 2002,
after publicity about his family members receiving money in connection with the presidential
campaign of Phil Gramm, defendant RYAN filed second amended tax returns, IRS Forms
1040X, for the years 1995 and 1996, in which he included the income he had received from the
presidential primary campaign and falsely stated to the Internal Revenue Service that it was the
presidential primary campaign’s idea for defendant RYAN to receive funds personally related to
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the presidential primary campaign.
31. It was further part of the corrupt endeavor that on or about December 21, 2002,
defendant RYAN filed a materially false amended income tax return, IRS form 1040X, for the
tax year 1997, in which he understated his actual gross income.
32. It was further part of the corrupt endeavor that defendant RYAN caused family
members and other recipients of gifts that he had given to file income tax returns that overstated
their income based on the inclusion as income of money or gifts given to them by defendant
RYAN.
All in violation of Title 26, United States Code, Section 7212(a).
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COUNT NINETEEN
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 1-24 of Count
Eighteen of this indictment are hereby realleged and incorporated herein as if fully set forth
herein.
2. On or about February 17, 1998, in the Northern District of Illinois, Eastern Division,
and elsewhere,
GEORGE H. RYAN, SR.,
defendant herein, willfully made and subscribed, and caused to be made and subscribed, an amended
joint United States Individual Income Tax Return (Form 1040X with schedules and attachments)
for the calendar year 1995, which return was verified by a written declaration that it was made under
the penalties of perjury, and filed with the Internal Revenue Service, which return he did not believe
to be true and correct as to every material matter, in that the defendant listed his adjusted gross
income as being $120,542.00, whereas, in truth and fact, as the defendant well knew, his adjusted
gross income was substantially in excess of said amount;
In violation of Title 26, United States Code, Section 7206(1).
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COUNT TWENTY
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 1-24 of Count
Eighteen of this indictment are hereby realleged and incorporated herein as if fully set forth herein.
2. On or about February 17, 1998, in the Northern District of Illinois, Eastern Division, and
elsewhere,
GEORGE H. RYAN, SR.,
defendant herein, willfully made and subscribed, and caused to be made and subscribed, an amended
joint United States Individual Income Tax Return (Form 1040X with schedules and attachments)
for the calendar year 1996, which return was verified by a written declaration that it was made under
the penalties of perjury, and filed with the Internal Revenue Service, which return he did not believe
to be true and correct as to every material matter, in that the defendant listed his adjusted gross
income as being $137,908.00, whereas, in truth and fact, as the defendant well knew, his adjusted
gross income was substantially in excess of said amount;
In violation of Title 26, United States Code, Section 7206(1).
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COUNT TWENTY ONE
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 1-24 of Count
Eighteen of this indictment are hereby realleged and incorporated herein as if fully set forth herein.
2. On or about April 10, 1998, in the Northern District of Illinois, Eastern Division, and
elsewhere,
GEORGE H. RYAN, SR.,
defendant herein, willfully made and subscribed, and caused to be made and subscribed, a joint
United States Individual Income Tax Return (Form 1040 with schedules and attachments) for the
calendar year 1997, which return was verified by a written declaration that it was made under the
penalties of perjury, and filed with the Internal Revenue Service, which return he did not believe to
be true and correct as to every material matter, in that the defendant listed his adjusted gross income
as being $106,486.00, whereas, in truth and fact, as the defendant well knew, his adjusted gross
income was substantially in excess of said amount;
In violation of Title 26, United States Code, Section 7206(1).
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COUNT TWENTY TWO
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations in paragraphs 1-4 of Count One and paragraphs 1-24 of Count
Eighteen of this indictment are hereby realleged and incorporated herein as if fully set forth herein.
2. On or about April 13, 1999, in the Northern District of Illinois, Eastern Division, and
elsewhere,
GEORGE H. RYAN, SR.,
defendant herein, willfully made and subscribed, and caused to be made and subscribed, a joint
United States Individual Income Tax Return (Form 1040 with schedules and attachments) for the
calendar year 1998, which return was verified by a written declaration that it was made under the
penalties of perjury, and filed with the Internal Revenue Service, which return he did not believe to
be true and correct as to every material matter, in that the defendant listed his adjusted gross income
as being $102,640.00, whereas, in truth and fact, as the defendant well knew, his adjusted gross
income was substantially in excess of said amount;
In violation of Title 26, United States Code, Section 7206(1).
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FORFEITURE ALLEGATIONS
The SPECIAL APRIL 2002 GRAND JURY further charges:
1. The allegations contained in Count One are hereby realleged for the purpose of
alleging forfeiture pursuant to Title 18, United States Code, Section 1963.
2. As a result of their violations of Title 18, United States Code, Section 1962(d),
GEORGE H. RYAN, SR. and LAWRENCE E. WARNER,
defendants herein:
(a) have acquired and maintained interests in violation of Title 18, United States
Code, Section 1962, which interests are subject to forfeiture to the United States pursuant to Title
18, United States Code, Section 1963(a)(1);
(b) have interests in, and property and contractual rights which afforded a source
of influence over, the enterprise named and described herein, which the defendants operated
controlled, conducted and participated in the conduct of in violation of Title 18, United States Code,
Section 1962, and which interests are subject to forfeiture to the United States pursuant to Title 18,
United States Code, Section 1963(a)(2); and
(c) have property constituting and derived from proceeds that the defendants
obtained, directly and indirectly, from the racketeering activity, in violation of Title 18, United
States Code, Section 1962, which property is subject to forfeiture to the United States pursuant to
Title 18, United States Code, Section 1963(a)(3).
3. The interests of the defendants subject to forfeiture to the United States pursuant to
Title 18, United States Code, Sections 1963(a)(1), (a)(2) and (a)(3), include, but are not limited to,
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the following:
(a) at least $3.1 million;
(b) Defendant WARNER’s interest in Joliet Maple LLC, including but not limited to, the real property having a Permanent Index Number of 07-11-500-011, commonly known as 605 Maple Road, Joliet, Illinois;
(c) Defendant WARNER’s interest in BL Mannheim Inc., including but not limited to, the real property having a Permanent Index Number of 15-09-300-100, commonly known as 405 N. Mannheim Road, Bellwood, Illinois;
4. To the extent that the property described above as being subject to forfeiture pursuant
to Title 18, United States Code, Section 1963, as a result of any act or omission of the defendants:
(a) cannot be located upon the exercise of due diligence;
(b) has been transferred or sold to, or deposited with, a third party;
(c) has been placed beyond the jurisdiction of the court;
(d) has been substantially diminished in value; or
(e) has been commingled with other property which cannot be divided without difficulty;
it is the intent of the United States, pursuant to Title 18, United States Code, Section 1963(m), to
seek forfeiture of any other property of the defendants up to the value of the property described as
being subject to forfeiture.
5. The defendants are jointly and severely liable for the forfeiture obligations as alleged
above.
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All pursuant to Title 18, United States Code, Section 1963.
A TRUE BILL:
Foreperson
United States Attorney
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