Antoin Rezko, a Chicago businessman and political fundraiser, was indicted today by a federal grand jury in Chicago on 24 counts of fraud in connection with "a scheme to obtain millions of dollars by shaking down" investment management firms doing business with the Illinois Teachers' Retirement System, Springfield, according to U.S. Attorney Patrick J. Fitzgerald. An arrest warrant has been issued and an Oct. 13 arraignment has been set for Mr. Rezko, who is believed to be traveling abroad and could not be reached for comment.
The indictment also charges former Illinois Teachers system trustee Stuart Levine with the same 24 counts of fraud. Mr. Levine, who was indicted last year on fraud charges and has been cooperating with federal authorities, will plead guilty to the superseding charges at a hearing Oct. 27, according to a statement from Mr. Fitzgerald.
Court documents allege that Messrs. Rezko and Levine started an "extensive fraud scheme" in 2003 that continued through at least July 2004, in which they sought to receive all or part of "finders fees" paid by money managers interested in doing business with the Illinois Teachers' plan.
Staff and trustees of the $36.5 billion teachers' fund today expressed outrage in a statement. "Rezko and Levine are accused of using pay-for-play schemes to enrich themselves and others instead of serving the best interests of the teachers and citizens of Illinois. Their actions are shameful," Jon Bauman, TRS executive director, said in a statement.
"No TRS assets were used to pay these fees, which prosecutors say were split among Rezko, Levine and others. … In most cases, the schemes were unsuccessful because TRS staff intervened or because the investment proposals were not worthy of consideration by the TRS board," according to the TRS statement.
Mr. Rezko was never involved directly with the TRS fund, Eva Golterman, public information officer at the system, said in an interview.
The system filed a civil suit in Cook County Circuit Court, Chicago, against Mr. Levine; Steve Loren, former outside counsel for TRS and his former legal firm, Gardener Carton & Douglas; and Joseph Cari, former partner of private equity fund HealthPoint Capital. The suit alleges criminal breach of fiduciary duties and seeks damages and reinstatement of $3.9 million in legal fees paid to Gardner Carton & Douglas.
"We will not hesitate to add (Mr.) Rezko or anyone else who committed fraud against our members and sullied TRS' good name," Ms. Golterman said. She declined to say whether TRS has or intends to file a similar civil suit against Mr. Rezko.