Politics

Witness: Gov's Father-In-Law Hungry For 'Spoils'

CHICAGO (CBS) ― Gov. Rod Blagojevich may be taking a cue from Sen. Barack Obama's playbook, calling indicted fundraiser and political insider Antoin "Tony" Rezko a friend, all the while trying to insulate himself from the Rezko scandal.

As CBS 2's Mike Parker reports, in the past the governor has used a pat, seemingly pre-scripted response to any and all questions about the scandal. But Monday, he departed from that, going so far as to say he won't run away from his friend and supporter.

"Sen. Obama said it right," Blagojevich said. "In politics you have friends and supporters who help you, who raise money for you, and you hope they do the right thing. You hope and pray they do things right. You hope and pray that things that are being said about them aren't true. And you don't run away from them."

As the governor was saying that, at Rezko's federal trial, the governor's name surfaced again, as well as the name of his father-in-law, Chicago Ald. Dick Mell.

Financier Sheldon Pekin testified that he and Rezko's alleged co-conspirator, Stuart Levine, arranged for a $750,000 finder's fee from an investment scheme involving the illinois teachers retirement system fund.

According to testimony, Levine wanted Pekin to split the fee with Ald. Mell. Pekin quoted Levine as saying Mell was "upset because he wasn't participating in the spoils" connected to the governor's 2002 campaign.

Levine later allegedly told Pekin that Mell did not want to go ahead with the deal.

In the end, the money was paid to a Glenview businessman instead, Pekin testified.

Ald. Mell, who has not been charged with wrongdoing, says this is all news to him.

He declined to be interviewed on camera, but told CBS 2 Monday, he never talked to Stuart Levine about any such deal, that in fact, he met Levine only once, at a crowded Blagojevich fundraiser in 2002.

As for Sheldon Pekin, Mell said "I wouldn't know him if he walked in the door."

Pekin testified that he was serving as a "finder" for a private equity company, Glencoe Capital. As a finder, it was his job to get Glencoe a share of the big teachers pension fund to invest.

Pekin said he initially believed that he would get a finder's fee of $750,000. He said he drew up a blank consulting contract to show that whoever ended up splitting the fee with him was actually a consultant.

He said the amount of the finder's fee was reduced from $750,000 to $375,000 because the investment was arranged in such a way that it would not be as lucrative for Glencoe Capital as initially expected.

He said Levine was unhappy when he told him the amount was half what was anticipated.

"He was very upset by it," Pekin said. He said he had originally expected to pocket half of the finder's fee but agreed to take a third and pass along the remainder.

Pekin is now retired. He entered the courtroom in a wheelchair, testified that he suffers from Parkinson's disease and at times had difficulty making himself understood. He testified under a grant of immunity from prosecution for anything he might say on the witness stand.

Rezko is also charged with scheming with Levine to split a $1 million bribe that was to be paid in exchange for giving a hospital company approval to build an $81 million branch in Crystal Lake in McHenry County.

Levine was a member of the board with power over hospital expansion programs in the state and another board that decided which money management firms would be allowed to invest teachers pension fund assets.

Rezko says he was not involved in any such schemes.

Rezko, 52, a major fundraiser for Blagojevich and Sen. Barack Obama, is charged with scheming with Levine to pressure kickbacks out of firms that wanted to invest money from the State Teachers Retirement System.

The system is a $30 billion fund that pays the pensions of retired downstate and suburban school teachers.

CBS 2's Mike Parker and the Associated Press contributed to this report.

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