Feds dig into Blagojevich pension

[November 10, 2011]  SPRINGFIELD (AP) -- Federal prosecutors are digging for data about convicted former Gov. Rod Blagojevich's potential pension income in advance of his sentencing on corruption charges, even though Illinois officials plan to block the disgraced Democrat from getting any state retirement pay.

U.S. Attorney Patrick Fitzgerald's office demanded records related to Blagojevich last month from two state pension programs, according to documents obtained by The Associated Press. Fitzgerald's spokesman Randall Samborn declined to comment.

Illinois law already prohibits state officials from collecting if they have been convicted of felonies related to their official duties. But prosecutors are probably drawing a picture of Blagojevich's finances before his Dec. 6 sentencing on 18 convictions, according to former federal prosecutor Julian Solotorovsky of Chicago. That will undoubtedly include prison time and potentially hefty financial penalties.

"They're trying to figure out his net worth so they can go in and argue for as much of a fine as possible," said Solotorovsky, now a private attorney specializing in white-collar crime.

State officials said last month they plan to deny Blagojevich's $65,000-a-year pension, just as they did to his predecessor, former Gov. George Ryan, who also was convicted of corruption. But Blagojevich would be due a refund of more than $129,000 he paid into the fund as a state legislator and later governor. And he's entitled in the future to at least $13,000 annually from his six-year stint in Congress.

Blagojevich was convicted in June on 17 counts of participating in sweeping schemes to raise campaign cash or enrich himself, including by selling an appointment to President Barack Obama's vacated U.S. Senate seat. With an additional conviction from a 2010 trial, he faces a maximum sentence of 305 years in prison and millions of dollars in fines. Experts say he is likely to receive about 10 years.

Before his sentencing hearing, lawyers for both sides will submit memos to U.S. District Judge James Zagel making their cases about what penalties should be assessed against the former governor -- and how able he is to pay fines.

"His net worth will be an issue," Solotorovsky said. "It's not unusual for the defense to say a defendant's net worth is 'X' and for the government to say it's '2X.'"

But Blagojevich's attorney Sheldon Sorosky, who said he was unaware of the subpoenas, suggested the government is looking for something beyond numbers. They might be checking whether Blagojevich applied for pension benefits and made claims about innocence that might contradict later statements or evidence at his sentencing, he said.

Blagojevich knows he won't qualify for a state pension and made no pitch to state officials for an exception, Sorosky said.

The former governor would be eligible to start collecting a $64,533-a-year state pension when he turns 55 Dec. 10, just days after his sentencing. That would have increased 3 percent a year, compounded, beginning at 60, according to the State Retirement Systems.

The federal subpoenas went to both the State Employees Retirement System and the General Assembly Retirement System. After serving in the Illinois House of Representatives from 1993 to 1997 and having returned from Congress, Blagojevich continued paying into the General Assembly's system as governor from 2003 to 2009.

Former federal prosecutor Phillip Turner said he doubts Zagel will impose a fine because it would mostly punish Blagojevich's two young daughters.

Immediately after a jury convicted Blagojevich last summer, prosecutors dropped without comment their demand that he forfeit his Chicago house and Washington, D.C., condominium. That indicates to Sorosky that the government is not interested in pummeling Blagojevich financially. He doesn't see a fine as a "realistic" part of the sentence.

"The judge knows he doesn't have any money," Sorosky said, "and Blagojevich didn't make any money" on the schemes for which he was convicted.

Most of Blagojevich's remaining net worth is tied up in his Chicago home, which he and his wife, Patti, put up for sale for $1.07 million.

Federal prison inmates must work an eight-hour-a-day job starting at 12 cents an hour. Inmates cannot earn money from outside ventures such as writing books. Blagojevich wrote a 2009 autobiographical defense, "The Governor," which is still for sale.

For serving in the U.S. House from 1997 to 2003, Blagojevich could start drawing the $13,000 congressional pension starting at age 62, according to Pete Sepp, executive vice president of the National Taxpayers Union, which follows federal pension issues.

Cost-of-living increases could boost that amount, Sepp said. And Blagojevich would also have been allowed to participate in a savings plan that includes a 5 percent employer match on salary contributions.

If Blagojevich took part, that nest egg could have reached six figures since he left Capitol Hill, Sepp said. It was not immediately clear whether he did.

Current federal law only withholds a pension from a former member if that person was convicted of crimes while serving in Congress, Sepp said.

But legislation introduced by Sen. Mark Kirk, R-Ill., who won last fall the Senate seat Obama once occupied, would prevent former members of Congress from getting a congressional pension if they're later convicted of any public corruption. It is awaiting a committee hearing, a spokesman said.

[Associated Press; By JOHN O'CONNOR]

Associated Press writer Michael Tarm in Chicago contributed to this report.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.