Casinos Say Blagojevich Took Track Payoffs

CHICAGO (CN) - In a federal action, four casinos say former Gov. Rod Blagojevich used the governor's office to enrich himself by agreeing with horse track owner John Johnston to secure enactment of legislation forcing casinos to pay millions of dollars to five horse tracks that included two controlled by Johnston.

To conceal their actions, Johnston arranged for the money to be paid through several entities under his control, according to the complaint. As a result, the plaintiff casinos say they had to pay $89.2 million for redistribution to horse tracks and their owners, fattening the tracks' profits at the plaintiffs' expense.

According to the RICO complaint: "Blagojevich's actions facilitating the passage of the 2006 Racing Act and his signing that Act into law were part of a broader scheme whereby Blagojevich conspired with Johnston and others to use his power and the Office of the Governor to enrich himself and Friends of Blagojevich, and to enrich his co-conspirators, without regard to the honest and faithful services he owed the people of Illinois and without regard to the law. Blagojevich had sold, and Johnston had purchased, enactment of this law.

"Specifically, on information and belief, between April and June of 2006, Blagojevich and Johnston, and possibly others in the horse racing industry, agreed that Johnston or his affiliates would pay Blagojevich or Friends of Blagojevich money in exchange for Blagojevich ensuring the enactment of the 2006 Racing Act, including by signing it into law. ...

"More particularly, on or about June 27, 2006, just a month after Blagojevich signed the 2006 Racing Act into law, Johnston fulfilled his end of his agreement with Blagojevich by causing several entities under his control (the 'Johnston Affiliates') to contribute a total of $125,000 to Friends for Blagojevich. Specifically, Balmoral Racing Club, Inc. contributed $10,000; Maywood Park Trotting Association contributed $10,000; Racing Association of Illinois contributed $20,000; Coast to Coast Food Services, Ltd. contributed $25,000; Egyptian Trotting Association contributed $20,000; and Associates Racing Association Inc. contributed $40,000."

Some of the negotiations that led to the bills' enactments were captured on wiretaps during the public corruption investigation of Blagojevich, the racetracks say. They say Blagojevich's longtime crony Alonzo Monk, a defendant in the federal corruption case, arranged for some of the payment.

According to the complaint: "On or about December 4, 2008, Monk, who was in Miami, Florida, called Blagojevich in Chicago, Illinois. During that call, Monk asked Blagojevich to call Johnston directly to discuss signing the bill in exchange for the payment of the $100,000 to Friends of Blagojevich as this would be better 'from a pressure point of view.' Blagojevich agreed to call Johnston directly.

"On December 9, 2008, agents of the Federal Bureau of Investigation arrested Blagojevich on federal corruption charges, including RICO violations.

"Six days later, on December 16, 2008, Blagojevich signed the 2008 Racing Bill."

The complaint states: "Plaintiff casinos were directly victimized by this criminal conduct. As a direct and proximate result of the pay-to-play scheme described in this complaint, plaintiff casinos have had to pay approximately $89.2 million into funds that, absent this suit, would be paid over to horse racing concerns and their owners. Balmoral Park and Maywood Park, together with other Illinois horse tracks, stand to receive tens of millions of dollars from these funds - an unconscionably tainted return from the 'investment' Johnston and his horse tracks paid to Blagojevich. To prevent this result, plaintiff casinos have brought this suit, seeking: (a) to recover damages inflicted on plaintiff casinos by the pattern of racketeering activities that resulted in Blagojevich's signing into law the 2006 Racing Act and then effectively extending that law in 2008; (b) to impose a constructive trust over any proceeds paid, or any claims to proceeds to be paid, to horse racing tracks from the funds into which those proceeds have been paid; and (c) to recover punitive damages, attorney fees, and costs as permitted by law."

Here are the parties to the suit: Empress Casino Joliet Corp., Des Plaines Development Limited Partnership dba Harrah's Casino Cruises Joliet, Hollywood Casino-Aurora Inc., and Elgin Riverboat Resort-Riverboat Casino dba Grand Victoria Casino v. Rod Blagojevich, Friends of Blagojevich, John Johnston, Balmoral Racing Club Inc., Maywood Park Trotting Assoc. Inc., Arlington Park Racecourse LLC, Fairmount Park Inc., and Hawthorne Race Course Inc.

Plaintiffs are represented by Robert Andalman with Loeb & Loeb.

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