The Work

January 8, 2009 7:30 PM

Pay-to-Play Allegations Plaguing Guvs Billy and Blago Good for Lawyers

Posted by Brian Baxter

The lawyers continue to line up to serve clients caught up in pay-to-play inquiries into Illinois Gov. Rod Blagojevich and New Mexico Gov. Bill Richardson.

On Thursday, The Am Law Daily learned that Howrey had been retained by Beverly Hills-based CDR Financial Products, a financial services firm under investigation by federal prosecutors in New Mexico for allegedly using campaign contributions to secure state contracts.

Richard Beckler, the cochair of Howrey's securities litigation and government enforcement practice, is advising CDR along with white-collar defense partner Joseph Walker. (Neither Beckler nor Walker responded to requests for comment; the firm's representation was confirmed by a CDR spokesperson.)

Bloomberg reports that U.S. Attorney Greg Fouratt in Albuquerque is leading the government inquiry, which is in grand jury proceedings. (Fouratt replaced former U.S. attorney David Iglesias, whose dismissal by the Justice Department in 2006 for "performance-related issues" led to congressional hearings.)

Fouratt and other federal prosecutors reportedly are looking into a May 2004 business trip to Los Angeles by David Contarino, Richardson's former chief of staff, and David Harris, former chief executive of the New Mexico Finance Authority, to visit CDR executives. (Bloomberg reports that the meeting allegedly took place after a state bond sale; CDR has donated $100,000 to various Richardson political committees.)

CDR relied on the advice of its tax counsel at the time, Fulbright & Jaworski, before agreeing to the meeting, says a CDR spokesperson. The firm no longer does work for the company.

Paul Kennedy, a name partner with Albuquerque's Kennedy & Han, is representing Harris. Kennedy told The Am Law Daily that Luis Stelzner of Albuquerque's Sheehan, Sheehan, & Stelzner has been retained by Contarino while Richardson has hired Peter Schoenburg of Albuquerque's Rothstein, Donatelli, Hughes, Dahlstrom, Schoenburg & Bienvenu as counsel. Kennedy declined to further comment.

No charges have yet been filed by federal prosecutors in New Mexico.

Formal charges also have yet to be filed against Illinois Gov. Rod Blagojevich. A federal judge ruled earlier this week that prosecutors could take an extra three months to bring a corruption indictment against the governor given the complexity of the case.

But others are stepping up their efforts to show Blagojevich the door. Illinois Lt. Gov. Patrick Quinn--brother of Schiff Hardin's head of litigation and, should Blago resign, the state's next governor--has hired former federal prosecutor and current Perkins Coie partner Patrick Collins to head a blue-ribbon state panel to, as he put it, "fumigate state government."

Collins, who helped convict former Illinois Gov. George Ryan, Sr., on corruption charges in 2006, will be tasked with developing mechanisms designed to prevent corruption by public officials. (Panel members, including Collins, will not be paid for their work; Collins did not return a request for comment.)

Meanwhile Hinshaw & Culbertson corporate partner Anthony Jacob is representing Blagojevich's campaign fund, Friends of Blagojevich. (We can't help but wonder just how many "friends" there are these days.)

Jacob, who previously served as deputy general counsel to the Illinois State Board of Elections, says he was formally retained by Blagojevich's political fund about a year and a half ago when his predecessor left to become a judge.

Asked if he's concerned about federal prosecutors targeting the fund as Collins and his former colleagues once did with Ryan's Citizens for Ryan fund, Jacob says he's not worried.

"[Ryan's] situation is totally different than our situation," Jacob says. "The Ryan case dealt with allegations of a governor using state employees tied to state money to raise campaign [funds]--there are no allegations of that [with Blagojevich]."

So far, Jacob says, most of his work for Friends of Blagojevich involves campaign finance and disclosure issues. He's being assisted by Daniel Purdom, the head of Hinshaw's white-collar defense practice, on other matters.

Jacob declined to comment on whether Blagojevich's fund was making disbursements to defense counsel for legal fees or whether he had been contacted by representatives from U.S. Attorney Patrick Fitzgerald's office.

The fund's last campaign finance report on June 30 showed that it contained roughly $3.6 million. Friends of Blagojevich is due to make its next filing on January 20--Inauguration Day.

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Good thing they are getting "lawyered-up." It sounds like they are going to need it.

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