Chicago Area Local News

CHICAGO (Sun-Times Media Wire) ― A longtime friend and ex-chief of staff to Rod Blagojevich said he was an eyewitness to a litany of corruption — including a scheme by the former governor and his top aides to profit off state business deals, according to a guilty plea entered Tuesday.

Lon Monk, 51, of Decatur, said in a plea agreement with the federal government that during the ex-governor's first term in office, there was an ongoing agreement among Blagojevich and his closest advisers that involved making hundreds of thousands of dollars off state business deals.

A personal friend of Blagojevich who was also the ex-governor's law school roommate, Monk said Blagojevich sat in on meetings where there were discussions about splitting money from state business four ways, according to the plea. The alleged recipients: Blagojevich, the now-deceased Christopher Kelly, convicted businessman Tony Rezko and Monk.

The plea indicates that Rezko was responsible for setting up money-making arrangements from the state deals. Monk said that Blagojevich and Monk agreed to use "their power and authority in state government" to help Rezko and Kelly make money. Monk said as part of the agreement, he and Blagojevich would "share in the money that was made" but they wouldn't get their cut until after they were no longer in government, according to the deal.

Monk's plea pledges his cooperation with federal prosecutors in exchange for a two-year prison sentence instead of the nearly four years he faced.

Neither Monk, nor his attorney, Michael Shepard, would comment as they left the federal courthouse.

One of Blagojevich's lawyers said he hadn't seen the plea deal yet but denied the former governor ever agreed to make money off the state with Rezko and Kelly.

"That is completely false. One-thousand percent false," Sheldon Sorosky said. "Blagojevich never participated in any deal or conference where he'd receive a kickback from any investments or any money that Rezko and Kelly made — from the state or otherwise."

One of the state deals involved the refinancing of $10 billion in Pension Obligation Bonds by the state of Illinois in 2003, according to the plea.

Monk says that two of Blagojevich's advisers picked the underwriter that Blagojevich subsequently chose to take the lead role on the bond sale. Monk said he learned there was a deal in which the four would split a $500,000 kickback from an investment firm acting as a consultant on the deal. The plea agreement doesn't give further details about the money.

Discussions about making money off of state deals stopped when the FBI visited Stuart Levine, a member of two state boards and a longtime political donor, according to the plea.

Still, Monk claims he received cash payments from Rezko from 2004 to 2005. Rezko delivered to Monk $10,000 in cash payments seven to nine times, his plea says.

"Rezko never suggested that [Monk] would have to pay Rezko back and [Monk] understood that the money that Rezko provided was a gift, not a loan," the plea indicates.

Monk said he told Kelly he worried about taking in all that cash because he hadn't had to withdraw any money from his bank accounts as a result.

"I get it, but don't worry about it," Kelly allegedly told Monk, according to the deal.

Monk also claims in his plea deal that Blagojevich and others met about making money off of a lucrative piece of property at Roosevelt and Clark in Chicago.

"Rezko talked about different ways that [Monk], Blagojevich, and Kelly could benefit from the Roosevelt and Clark Project, such as by having Blagojevich's wife work on marketing the project or by allowing [Monk] to work on the project after [Monk] left state government," the plea indicates.

While Monk admitted to knowing about a variety of alleged schemes including one involving a tollway project and another involving state money for Children's Memorial Hospital. His plea deal calls for a two-year sentence, instead of up to the nearly four years in prison he faced.

Monk pleaded guilty to just one charge — that he schemed with the ex-governor to shake down a racetrack businessman for a $100,000 campaign contribution in exchange for the governor's signature on a pending piece of legislation that would benefit horse racing in Illinois. Some of the conversations related to the scheme were caught on tape, according to the plea.

Monk, a lobbyist working for racetrack owner Johnny Johnston, said he worked with Blagojevich to push Johnston to make the donation.

Monk's plea is the second in the governor's case.

John Harris, who also is a former chief of staff, also admitted to corruption under Blagojevich.

--Natasha Korecki, Chicago Sun-Times

(Source: Sun-Times Media Wire © Chicago Sun-Times 2009. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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